(Reuters) -UK shares bounced back on Wednesday after suffering their worst day in nearly five months in the previous session as investors worried about the fiscal health of the British economy.
The blue-chip FTSE 100 and the domestically focussed midcap index both closed up 0.7%.
Stocks had closed lower on Tuesday, pressured by rising yields on gilts, amid investor anxiety about the UK’s ability to get its finances under control. The yield on the 30-year gilt rose in Tuesday’s session to its highest since 1998.
However, Bank of England Governor Andrew Bailey told a committee hearing that it was “important not to over-focus” on this as the government no longer raised significant finance from debt of this maturity.
Meanwhile, finance minister Rachel Reeves said she would deliver her annual budget on November 26, emphasising that a “tight grip” on public spending could help lower inflation and borrowing costs.
In the market, precious and industrial miners rose, tracking prices of gold and base metals respectively.
Hochschild Mining jumped 7.6% to its highest since early 2013, after the company to sell its Chile-based Volcan gold project operator.
Anglo American added 2.3%. The miner has proposed to sell remaining stake in Valterra Platinum.
Heavyweight healthcare and bank stocks were among the strongest performers on the benchmark index.
Banks have been under pressure since last Friday after a think-tank recommended a new tax on lenders as a possible way for Reeves to raise revenue.
Limiting gains were energy stocks with giants Shell and BP down about 1.3% each, as oil prices slipped. [O/R]
In other news, Watches of Switzerland jumped 6.1% after saying it was on track to report fiscal first-half results in line with its expectations on strong U.S. demand.
Hilton Food Group fell 17.4% after flagging higher costs in its seafood business and regulatory curbs at its Foppen unit in Greece.
Meanwhile, a survey showed a jump in new business drove Britain’s services sector last month to its fastest growth in more than a year.
In the U.S., a softer-than-expected job openings report for July strengthened bets of an imminent interest rate cut.
(Reporting by Sukriti Gupta in BengaluruEditing by Tasim Zahid and Gareth Jones)
