UK shares rose in thin holiday trading on Wednesday with defensive and financial stocks leading gains, against the backdrop of Britain rising COVID-19 cases and slim prospects of pandemic-related lockdowns this year.
The blue-chip FTSE 100 gained 1.1 percent following a two-day Christmas break and is on track for its best yearly performance since 2009.
Britain reported a record 129,471 new cases of COVID-19 on Tuesday, a day after Prime Minister Boris Johnson said he would not bring in new restrictions this year to limit the spread of the omicron coronavirus variant.
Banks added 1.1 percent, eyeing gains for the fifth straight week, as shares of HSBC, Barclays, Standard Chartered and Lloyds Group rose after the Bank of England increased its interest rate to 0.25 percent from a record low of 0.1 percent for the first time since the pandemic.
“There is some inclination toward the defensive and financials stocks, as market participants have been bruised by the volatility of the new (coronavirus) variant,” said Kunal Sawhney, chief executive at Kalkine Group.
Despite a turbulent year and record-low interest rates, London’s banking stocks are eyeing their best year since 2012. The banking index in UK has gained 22.9 percent this year, outperforming the 15.4 percent rise in FTSE 100.
Defensive sectors such as consumer staples that tend to be less sensitive to the economic climate boosted the FTSE 100 index.
Reckitt Benckiser, Diageo and Unilever gained between 0.9 percent and 1.6 percent.
The domestically focussed mid-cap index advanced 1.5 percent in morning trade helped by retail stocks, with Marks and Spencer gaining 3.1 percent.
Drugmaker AstraZeneca rose 1.0 percent after closing an agreement with Ionis Pharmaceuticals to develop and commercialize a drug.
Stock markets set for best month ever; gold and dollar pay the price