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FTSE 100 ends higher as Wall St rallies ahead of mid-term outcome

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain

By Johann M Cherian

(Reuters) -Britain's blue-chip stock index closed slightly up on Tuesday as Wall Street rallied ahead of the outcome of U.S. mid-term elections, while the UK's second-largest housebuilder Persimmon tumbled as it warned of a hit to annual profit margins.

The export-oriented FTSE 100 closed 0.1% higher after falling as much as 0.8% earlier.

U.S. stocks rallied as voting kicked off in the crucial mid-term election that will determine control of Congress, with some investors hoping for a political gridlock that could prevent radical policy changes. [.N]

"My broad way of looking at it is that a strong boost in U.S. stocks would likely weaken the dollar and thereby strengthen the pound helping domestic companies in the UK," said Giles Coghlan, chief market analyst at HYCM.

The domestically focussed midcap index closed the session 0.8% higher.

Looking ahead, investors will also focus on third-quarter GDP data on Friday for hints about the British economy's health.

Persimmon dropped 5.2% after the company flagged that house prices deteriorated and its sales rate slipped amid political and economic turmoil. The FTSE 350 home construction sector index dropped 1.6%.

"It feels like reality is starting to catch up with the housebuilders," said Derren Nathan, head of equity research at Hargreaves Lansdown.

"In 2023, prices are likely to come back, and if inflation keeps on going the way it is, that's going to be a double hit to margins."

Energy firms shed 2.8%, tracking weakness in oil prices, on recession concerns and worsening COVID-19 outbreaks in top crude importer China. [O/R]

Miners recovered from early losses to close up 0.6%. [METL/]

Among other single stocks, Associated British Foods climbed 2.1% after the Primark owner reported a 42% surge in 2021-22 profit, while soft drinks bottler Coca-Cola HBC AG rose 2.5% after it raised its full-year profit forecast.

Hilton Food Group sank 15.1% to the bottom of the midcap index after flagging a bleak full-year operating profit outlook and macro-economic challenges.

(Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Rashmi Aich, Uttaresh.V and Emelia Sithole-Matarise)