FTSE 100 logs highest close in 2024 as labour data fuels rate-cuts bets

By Shristi Achar A and Pranav Kashyap

(Reuters) -The UK's benchmark FTSE 100 jumped 1% on Tuesday as pound and bond yields slipped after slowing domestic wage growth boosted hopes that the Bank of England may begin monetary policy easing this year.

The blue-chip FTSE 100 rose 1.0%, logging its best day in nearly a month and closing at its highest level since May 2023.

Data showed British wages excluding bonuses grew at their slowest pace since October 2022 during the three months to the end of January, while the unemployment rate edged up unexpectedly.

"There could be further declaration in wages down the line, as the jobs data showed signs that the UK labour market is loosening," said Kathleen Brooks, research director at XTB.

Yields on the UK 10-year benchmark gilt fell after the data, last at 3.950%, while the pound slipped to $1.2743, propping up equities.

Meanwhile, U.S. consumer prices increased solidly in February amid higher costs for gasoline and shelter, suggesting some stickiness in inflation that could delay an anticipated June interest rate cut from the Federal Reserve.

Money markets are now pricing in around 72 basis points (bps) of rate cut from the BoE, up from around 67 bps a day earlier. [0#BOEWATCH]

Rate-sensitive banks and life insurers led sectoral gains, up over 2% each, while energy shares also did heavy lifting as crude prices remained steady after OPEC stuck by its forecast for demand growth this year. [O/R]

Homebuilders underperformed, dragged by Persimmon dropping 3.7%, after the homebuilder warned of subdued market conditions throughout this year.

The midcap FTSE 250 index edged 0.2% higher, propelled by a 10.1% surge in TP ICAP, after the broker said it was exploring options for its high-margin data unit Parameta, including the potential listing of a minority stake.

Gains on the mid-cap index were limited by Domino's Pizza Group slumping 3.6%, on forecasting lower first-quarter orders and like-for-like sales growth.

(Reporting by Shristi Achar A and Shubham Batra in Bengaluru; Editing by Rashmi Aich and Josie Kao)