FTSE 100 near five-month high on BoE rate cut optimism

The blue-chip index gained 0.7% to close at its highest level since late May, while the domestically focused FTSE 250 index jumped 0.6% to end at a more than two-week high

The UK's FTSE 100 closed at a near five-month high on Thursday, as pest control group Rentokil announced an overhaul of its struggling North America business, while investors continued to bet on further policy easing by the BoE.

The blue-chip index gained 0.7% to close at its highest level since late May, while the domestically focused FTSE 250 index jumped 0.6% to end at a more than two-week high.

Rentokil Initial climbed 8.8% after it said its North America finance chief has left the group and it appointed a new chief marketing officer and chief operating officer. That helped offset disappointment around a profit warning.

London-listed precious metal miners such as Hochschild Mining and Centamin gained 9.4% and 4.6%, respectively, as gold prices reached a record high on expectations of more rate cuts from the Fed.

The ECB reduced rates for the third time this year earlier on Thursday, saying the outlook for the broader euro zone economy was worsening.

Meanwhile, data on Wednesday that showed British inflation declined to the lowest since April 2021 prompted traders to price in a stronger chance of a UK rate cut in November.

The spotlight is also shifting from macro factors to the earnings season.

What is missing at the moment for British equities to start performing better and start an uptrend, is really earnings to start delivering better. That has been the missing link, according to Lilian Chovin, head of asset allocation at the British private bank Coutts.

While U.S. and euro zone stock markets are trading near record highs, British stock markets have lagged somewhat, with the midcap index far from its peak reached in 2021.