UK's blue-chip FTSE 100 rose for a fourth straight session and touched its highest in over a week on Thursday as gains in financial and energy stocks offset worries about a decline in Britain's economy.
The FTSE 100 (.FTSE), home to major export-oriented firms, rose 0.5% and the more domestically oriented FTSE 250 added 0.4% as risk appetite held strong in the final trading days of 2022.
"It seems that the Santa rally has finally materialised, the FTSE 100 is very much directed on expectations for the global economy, and consumer confidence from the U.S. appears to have boosted sentiment across markets," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Better-than-expected earnings from Nike Inc (NKE.N) and FedEx (FDX.N), coupled with an uptick in consumer confidence in the world's largest economy, boosted Wall Street's main indexes on Wednesday.
The UK's energy sector (.FTNMX601010) climbed 1% as oil prices rose on tight crude stocks in the United States.
Capping gains, however, data showed that Britain's economic activity shrunk by a bigger-than-expected 0.3% in the third quarter, as declines in manufacturing and construction dragged the headline gross domestic product figure down.
"The data confirms expectations that the UK economy is heading towards a recession. The pressures from inflation meant less money was available for other expenditure during the quarter," said Victoria Scholar, head of investment at interactive investor.
Markets are also bracing for a possible dip in fourth-quarter company earnings, but both the FTSE blue-chip and mid-cap indexes are eyeing quarterly gains between 9% and 10%.
In company news, I3 Energy Co (I3E.L) soared 13% after the oil and gas company raised its 2023 minimum dividend by 59.4% above total dividends paid during 2022.
