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Upbeat earnings set UK stocks for strong monthly performance

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Britain’s top equity indexes rose on Friday and were on pace to mark their strongest monthly performance of 2022, as a slew of upbeat earnings reports including from lenders NatWest and Standard Chartered outweighed economic slowdown worries.

The blue-chip FTSE 100 gained 0.7% while the domestically focussed midcap FTSE 250 climbed 1.3%, both holding at seven-week highs.

NatWest rose 7.3% after the bank raised its full-year forecast and made a bumper payout to shareholders, while emerging markets-focussed Standard Chartered climbed 2.6% on an upbeat outlook.

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“A lot of people were worried about a recession and companies meeting expectations ahead of the earnings season,” said Rachel Winter, partner at Killik & Co.

“Bank earnings have been strong because of higher interest rates and those with trading desks have benefitted from the high volatility in markets,” said Winter, adding that bank stocks including Lloyds, which were out of favor for long, looked attractive.

UK’s bank index rose 1.6%, but was set to post a small monthly decline.

All eyes are on the Bank of England’s meeting next week, with a Reuters poll of economists forecasting another 25-basis-point increase to tame inflation running at a four-decade high.

Still, global markets have recovered this month as signs that the Federal Reserve could slow the pace of interest rate hikes and better-than-expected earnings reports from tech giants boosted sentiment.

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The FTSE 100 was set for its best monthly showing since December 2021, while the midcap index was looking at its best month since December 2020.

British Airways-owner IAG was flat even though it returned to profit for the first time since the outbreak of the COVID-19 pandemic, led by demand for European flights.

Jupiter Fund Management slid 4.6% as the asset manager reported a fall in half-yearly profit, hit by rising outflows as key global markets buckled under geopolitical tensions and inflationary concerns. (Reporting by Sruthi Shankar in Bengaluru; Editing by Vinay Dwivedi and Subhranshu Sahu)

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