UK stocks end the week higher amid political, economic turmoil

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

By Sruthi Shankar and Bansari Mayur Kamdar

(Reuters) -UK's FTSE 100 inched up on Friday boosted by energy and consumer staple stocks at the end of a week marked by political turmoil in Britain, soaring energy prices in Europe and hawkish comments from major central banks.

The blue-chip FTSE 100 rose 0.1% after falling as much as 0.8%, while the domestically oriented FTSE midcap index advanced 0.2%. Both the indexes still ended the week higher.

Oil majors BP and Shell gained 0.3% and 0.5%, respectively, boosting the commodity-heavy FTSE 100, as crude prices climbed in volatile trade on concerns of supply tighteness. [O/R]

Nevertheless, energy stocks were among the worst performers this week as crude prices declined on concerns over a potential recession-driven demand downturn.

The pound reversed course and edged higher after falling as much as 0.9% an unfavourable macroeconomic backdrop overshadowed concerns about politics after Prime Minister Boris Johnson announced his resignation.

The currency had hit a two-year low versus the dollar earlier this week amid the political chaos as well as worries about economic growth.

"We now see a partial policy vacuum at a time when the economy is stagnating and it's unlikely the Budget will be presented until late in Q4," Javier Corominas, director of global macro strategy at Oxford Economics said in a note.

"This will increase the focus on the Bank of England, further reducing the chances of a step up in the pace of rate hikes as it adopts a wait-and-see approach over weeks ahead."

UK markets started the day on shaky footing as risk aversion gripped global markets after the shooting of former Japanese Prime Minister Shinzo Abe, but climbed after a strong jobs report in the U.S. strengthened the case for another big interest rate hike by the Federal Reserve and eased some concerns about recession. [MKTS/GLOB]

Housebuilder Vistry Group Plc rose 2.2% after it forecast gross margins to rise significantly in fiscal 2022, riding on strong demand across its businesses.

(Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru; Editing by Amy Caren Daniel and Arun Koyyur)