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FTSE 100 up on energy, financial gains ahead of U.S. inflation data

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UK’s FTSE 100 rose on Tuesday, supported by energy and financial stocks, ahead of U.S. inflation data that could dictate the path of interest rate hikes in the world’s biggest economy.

Both the blue-chip FTSE 100 and the mid-cap FTSE 250 were 0.3% higher by 0938 GMT.

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Energy stocks climbed 1.3% as supply challenges in the United States bumped up crude prices, while banks added 1.5%.

The U.S. consumer inflation data, expected at 1330 GMT, comes ahead of the Federal Reserve’s interest rate decision on Wednesday, and would follow data last week showing a greater-than-expected rise in producer prices in November.

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“I think (U.S.) inflation is coming down. Everyone was worried about the fact that producer inflation came in higher than expected but it was still the lowest since the middle of 2021,” said Michael Hewson, chief market analyst at CMC Markets.

“The bigger question is what is to follow in January and February and ultimately I think it may still guide to a slightly higher terminal rate for the Fed.”

Money markets are currently expecting the Fed to raise rates by 50 basis points on Wednesday.

Meanwhile, UK data showed that wage growth rose by 6.1% in October, ahead of the Bank of England’s monetary policy meeting on Thursday.

“Any thought that the BoE would raise rates by 25 basis points this week has been firmly put to rest … the rise in wage growth would embolden hawks on the Monetary Policy Committee to push for a 50 basis point hike and a higher terminal rate in 2023,” Hewson said.

British American Tobacco fell 0.5%, after the U.S. Supreme Court denied an emergency request to put on hold the ban on selling all flavored tobacco products in California. (Reporting by Johann M Cherian in Bengaluru; Editing by Nivedita Bhattacharjee and Devika Syamnath)


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