FTSE 100 moves higher after UK economy rebounds in August

London’s top stock index has moved higher after official figures showed the UK economy bounced back in August, further dampening fears of an impending recession.

Energy stocks and pharmaceutical giants have helped lift the FTSE 100, bucking the trend across European markets which faced a lacklustre day of trading.

The index gained 24.75 points, or 0.32%, to close at 7,644.78.

New data from the Office for National Statistics showed that gross domestic product (GDP) rose by 0.2% in August, compared to a 0.6% drop in July.

While only a slight rebound, the data puts the UK one step closer to avoiding a recession this year, which is defined as two consecutive quarters of negative GDP.

Meanwhile, the mood among global investors was dampened after new data from the US showed Consumer Prices Index (CPI) inflation was higher than expected in September.

It further stokes fears that interest rates could have to stay higher for longer in order to put a lid on rising prices.

Elsewhere in Europe, Germany’s Dax fell 0.23% and France’s Cac 40 declined by 0.37%.

Over in the US, the S&P 500 was flat and Dow Jones was down 0.25% by the time European markets closed.

The pound lost ground against the US dollar during the afternoon, and was down by around 0.8% to 1.2213 dollars. Sterling was down by about 0.1% to 1.1575 euros.

The price of Brent crude oil was up by 1.03% to 86.7 US dollars per barrel.

In company news, shares in Halfords soared by nearly a fifth amid speculation that the motoring and cycling retailer had been approached by a potential buyer for the business.

According to a report in Betaville, Halfords had received a takeover bid in recent months. But the company said it does not comment on rumour and speculation.

Nevertheless, investors were betting on the good fortunes of the firm and its share price closed 18.5% higher.

Elsewhere, shares in The Restaurant Group (TRG) surged by more than a third after the Wagamama owner said it has agreed to a takeover by private equity giant Apollo in a deal worth £701 million including debts.

The takeover comes after TRG recently agreed to sell off its loss-making restaurant chains Frankie & Benny’s and Chiquito to Big Table Group.

Apollo said TRG had proven to be “resilient through macroeconomic cycles” but that it needed the support of private capital to “achieve its ambitions”. Its share price closed 36.1% higher.

The biggest risers on the FTSE 100 were BP, up 15.8p to 536.1p, Hikma Pharmaceuticals, up 41p to 2,120p, Sage Group, up 19p to 1,020p, Melrose Industries, up 8.2p to 481.5p, and Astrazeneca, up 176p to 11,120p.

The biggest fallers on the FTSE 100 were Taylor Wimpey, down 5.75p to 111p, Fresnillo, down 17.4p to 528.8p, Barclays, down 4.9p to 152.28p, Ocado, down 15.4p to 572.2p, and Croda, down 105p to 4,439p.