Late market roundup: Shares rise as cooling inflation cheers investors

London stocks rallied on Wednesday, outperforming their European peers after softer-than-expected UK inflation bolstered expectations for lower interest rates, while gains in miners and renewed takeover activity helped drive the FTSE 100 higher.

The FTSE 100 index closed up 131.06 points, 1.2%, at 10,716.97. The FTSE 250 ended up 174.23 points, 0.7%, at 23,926.63, and the AIM all-share closed up 8.95 points, 1.2%, at 775.08.

The Cboe UK 100 was up 1.4% at 1,066.18, the Cboe UK 250 was 0.9% higher at 20,813.23, and the Cboe small companies was up 0.5% at 18,529.08.

In European equities on Wednesday, the CAC 40 in Paris closed up 1.0%, while the DAX 40 in Frankfurt ended 0.6% higher.

The pound was slightly higher at USD1.3377 on Wednesday afternoon from USD1.3375 at the equities close on Tuesday. Against the euro, sterling was marginally lower at EUR1.1717 from EUR1.1720 a day prior.

The euro stood a little higher at USD1.1410 from USD1.1408. Against the yen, the dollar was trading higher at JPY163.12 compared to JPY162.97.

Analysts on Wednesday said lower UK inflation weakens the case for Bank of England rate hikes, after inflation fell by more than expected in June.

The consumer prices index rose by 2.6% in the 12 months to June, down from 2.8% in May and below the FXStreet-cited forecast of 2.7%.

On a monthly basis, CPI rose by 0.1% in June, compared with a rise of 0.3% a year ago, in line with market forecasts.

The ONS said transport, and food and non-alcoholic beverages made the biggest downward contributions to the monthly change.

Lloyds analysts noted that Wednesday's inflation data marks a third consecutive downside surprise to the Monetary Policy Committee's expected path. The bank said this supports the view that recent upside inflation risks have been less persistent than expected.

"More broadly, the latest data provide further evidence that the inflationary impact of the Iran war on the UK economy has been more limited than initially feared. While the conflict drove a sharp rise in oil prices earlier this year, subsequent declines in wholesale energy prices meant that the pass-through into consumer inflation proved less pronounced than expected," Lloyds said.

Meanwhile, US President Donald Trump has warned Iran that the US will destroy one bridge or power plant each time Iran shoots at a ship in the Strait of Hormuz.

The warning came after the US carried out another wave of strikes on Iran, where air defences opened fire over the capital, Tehran.

Iran launched a missile attack on a Jordanian city on Israel's doorstep, and alerts were issued in Bahrain and Saudi Arabia.

Brent oil was higher at USD93.74 a barrel on Wednesday afternoon, from USD91.36 late Tuesday.

Stocks in New York were mostly higher. The Dow Jones Industrial Average was up 0.3%, the S&P 500 index was 0.1% higher, and the Nasdaq Composite retreated 0.1%.

The yield on the US 10-year Treasury widened to 4.65% on Wednesday from 4.63% on Tuesday. The yield on the US 30-year Treasury stretched slightly to 5.14% from 5.13%.

Back in London, miners ended higher on Tuesday as the price of gold rose.

Gold climbed to USD4,157.48 an ounce on Wednesday from USD4,077.93 at Tuesday's close.

Endeavour Mining gained 5.3%, Fresnillo finished 3.7% higher and Antofagasta advanced 3.5%.

Shares in Segro finished up 2.9%. After the close, the company said its board would be minded to recommend Prologis' best and final proposal.

San Francisco, California-based Prologis offered 0.0920 new Prologis share for each Segro share held, valuing the London-based property investor at £14.0 billion or 1,031.7 pence per share. It also increased the value of a partial cash alternative to up to £3.5 billion.

Following discussions on Wednesday, Segro said Prologis will commit to establishing a secondary listing of its shares in London, on or before completion, if it makes a firm offer for Segro.

On the FTSE 250 index, Greencore shares gained 8.5% as it increased full-year profit guidance after a strong third quarter.

The Dublin-based convenience food maker now expects full-year adjusted operating profit for continuing operations to be above current market expectations and in the range of £234 million to £242 million.

This would be nearly double £125.7 million reported in the 52 weeks to September 26, 2025, and above prior company compiled consensus of between £219 million to £231 million.

AJ Bell analyst Russ Mould said: "Greencore continues to innovate its product offering to keep on top of consumer trends. Resilient sales suggest this approach is paying off and that appetite for convenience snacks and food on-the-go is undiminished despite the tricky consumer backdrop."

easyJet shares sunk 12% after Reuters reported that the European Union is preparing a review of airline ownership rules to prevent foreign investors from taking control of carriers.

The EU review would "protect ​strategic autonomy" to ensure control of regional carriers remains within the bloc, an EU official said, Reuters reported.

It comes amid a bidding war between US investment firms Apollo and Castlelake for easyJet.

Shares in JD Wetherspoon were also lower on Wednesday, and lost 4.2%, after it blamed rising costs across the business and warned full-year profit will be below market expectations.

In a brief trading statement, Chair Tim Martin said: "Profits for the year are likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher costs in the areas of food, labour, repairs, energy and business rates."

Among small caps, Reach shares sank 24% as it swung to a loss and blamed lower referrals from Google which hurt digital advertising revenue.

Reach owns the Mirror, Express, Daily Record and Daily Star national titles in the UK, as well as local publications.

The company declared an interim dividend of 1.44p for the first half of 2026, cut from 2.88p a year before.

Reach swung to a pretax loss of £45.3 million in the six months that ended June 30 from a £27.0 million profit a year before, as revenue fell by 9.0% to £232.9 million from £256.0 million.

The biggest risers on the FTSE 100 were Endeavour Mining, up 189.00p at 3,743.00p, Airtel Africa, up 13.80p at 349.00p, Fresnillo, up 94.00p at 2,660.00p, Antofagasta, up 129.00p at 3,796.00p, and Persimmon, up 37.00p at 1,093.50p.

The biggest fallers on the FTSE 100 were Burberry, down 36.00p at 1,050.50p, Pearson, down 24.00p at 1,207.00p, Metlen Energy & Metals, down EUR0.82 at EUR43.26, Informa, down 10.80p at 866.40p, and IG Group, down 20.00p at 1,724.00p.

On Thursday's economic calendar, there is an interest rate decision for the European Central Bank, as well as weekly jobless figures for the US.

The European Central Bank is expected to leave interest rates unchanged as it announces its decision at 1315 BST on Thursday, followed by a press conference with President Christine Lagarde at 1345 BST.

The ECB's deposit facility rate currently stands at 2.25%, while the main refinancing operations rate is 2.40% and the marginal lending facility rate is 2.65%.

On Thursday's UK corporate calendar, there are half year results for Centrica and Relx, first quarter figures for BT Group and Airtel Africa as well as trading statements from Anglo American, 3i Group and easyJet, among others.

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