UK's FTSE 100 closes slightly higher

The blue-chip FTSE 100 rose 0.1%, while the FTSE 250 index of midcap companies slipped 0.3%

The UK's FTSE 100 closed slightly higher on Wednesday as U.S. inflation data was in line with expectations, keeping hopes of rate cuts intact, while defence company Smiths Group rallied after upgrading its revenue outlook.

The blue-chip FTSE 100 rose 0.1%, while the FTSE 250 index of midcap companies slipped 0.3%.

U.S. stocks pared early declines after consumer prices rose as expected in October, and did not change expectations that the country’s central bank would deliver a third rate cut in December.

We still think it is most likely the Fed will cut rates at the upcoming December meeting, but an outside possibility of a 'skip' still exists, according to Preston Caldwell, chief U.S. economist at Morningstar.

Meanwhile, persistently high inflation in Britain poses a risk that some drivers of price growth could be heading upwards, BoE interest rate-setter Catherine Mann said.

The Bank of England last week cut borrowing costs for only the second time since 2020 and said further cuts were likely to be gradual as it assessed the persistence of inflation pressures.

UK stocks have wavered since Donald Trump's re-election as U.S. president, as investors fret over the possibility of a trade war hurting the European economy. Disappointment over China's stimulus steps has also weighed on the mood.

Smiths Group soared 10.5%, having hit a record high earlier, after the British engineering company upgraded its annual organic revenue outlook following strong demand for its next-generation scanning and explosives detectors.

Babcock climbed 3% after the defence group said it was on track to meet forecasts for the full year as the backdrop of geopolitical instability drives demand for its defence equipment and services.