The FTSE 100 closed down 0.3% on Thursday after reversing earlier gains, according to Investing.com. U.S. indices had set a negative tone amid worries about artificial intelligence and data-center stocks.
The Bank of England raised its benchmark rate by 25 basis points to 4%, its first increase in more than three years. The central bank said at least one more increase is likely if the conflict between the United States and Iran continues to disrupt shipping corridors. It projected that British headline inflation could rise to around 5% by the middle of next year, more than double its 2% target.
The Monetary Policy Committee said there has been little evidence so far of rapid inflation spreading beyond sectors directly hit by higher energy costs. It said the volume of pipeline pricing pressures made an immediate preventive hike necessary to avoid unanchoring expectations.
UK banks led the early advance, with Barclays, Standard Chartered, Lloyds Banking Group and HSBC Holdings each rising between 1.5% and 2.5% in the morning session. Diageo shares rose 3.2% after the spirits maker reported first-quarter revenue that beat analyst expectations.
Oil reversed course, with Brent crude futures up 2.1% on Thursday. The report links the earlier fall in energy prices to a Democratic sweep in U.S. midterm elections, which it says reduced fears of U.S. military escalation against Iran and raised expectations of diplomacy to reopen tanker transit through the Strait of Hormuz. Energy majors Shell and BP closed 0.3% and 0.7% lower.