FTSE ends week strongly as European GDP growth offsets inflation fears

The FTSE 100 climbed to a seven-week high as another strong session for equity updates calmed investors despite soaring inflation in Europe.

Positive trading for Natwest and Glencore helped banking firms and miners respectively in London.

Europe’s biggest markets also jumped as better-than-expected GDP growth of 0.7% over the second quarter helped keep sentiment rosy despite figures revealing that inflation hit a new high of 8.9% earlier this month.

London’s top index of firms ended the day up 78.18 points, or 1.06%, at 7,423.43.

The German Dax increased 1.47% by the end of the session while the French Cac improved by 1.79%.

“It’s been another positive week for markets in Europe, with investors taking comfort from earnings numbers that have by and large been better than expected, despite concerns about the growth outlook,” commented Michael, Hewson, chief market analyst at CMC Markets UK.

“The gains seen this month have offered a welcome respite, while the belief that central banks may have to pare back the number of rate hikes they can deliver is also helping, pushing yields sharply lower, and improving the attractiveness of stocks in general.

“The FTSE 100 has seen a strong end to the week, pushing above 7,400 for the first time since early June, helped by a strong performance from the banks and the mining sector.”

In the US, stocks shot higher at the start of trading again, putting Wall Street’s markets on track for their best month since November 2020, when vaccine news buoyed trading.

Meanwhile, sterling had a steady session but lost pace against the euro as it was boosted by confirmation of economic growth in the Eurozone.

The pound was down 0.02% against the dollar at 1.212 and was 0.2% lower against the euro at 1.192 at the close.

In company news, Natwest was among the top performers after it posted an increase in profits and revealed plans to give shareholders a special £1.8 billion payout.

The banking group said pre-tax operating profit hit £2.6 billion in the last six-month period, up 13% and ahead of what analysts had predicted.

Shares closed 18.6p higher at 248.6p.

British Airways owner Intercontinental Airlines Group (IAG) saw shares lose altitude despite returning to profit for the first time since the start of the coronavirus pandemic

IAG finished 3.16p lower at 118.74p after it reduced its passenger capacity guidance for the second half of 2022.

AstraZeneca was also down for the day despite raising its revenue forecast for the year after strong demand for its Covid-19 antibody treatment and cancer medication.

The Anglo-Swedish firm fell by 26p to 10,844p as it posted a 53% decline in operating profits to 1.4 billion dollars (£1.15 billion) for the first six months of the year.

The price of oil lifted to a new three-week high as the positive economic data in Europe also aided sentiment on energy.

Brent crude oil increased by 3.01% to 110.37 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Natwest, up 18.6p at 248.6p, Ocado, up 53.6p at 839.4p, Fresnillo, up 39.6p at 737.4p, Aveva, up 126p at 2,357p, and Croda, up 344p at 7482p.

The biggest fallers of the session were BAT, down 152p at 3,220.5p, Aveva, down 19.8p at 465p, and IAG, down 3.16p at 118.74p,