London shares rise on US interest rate cut optimism, boost Kingfisher By Reuters

(Reuters) – It rose to a two-week high on Tuesday, lifted by rising bets for a bigger U.S. interest rate cut and strength in domestic retail shares after an improved forecast from Gull (LON:).

The blue-chip FTSE 100 rose 0.7% to its highest level since September 3. Sterling eased slightly, easing some pressure on the index’s export-oriented companies.

All major sectoral indices were in the green, with autos and retail trade up 1.7% and 1.6% respectively.

The mid-cap index rose 0.2%.

European home improvement retailer Kingfisher led the FTSE 100 gains after raising the bottom line of its full-year profit outlook, citing improving seasonal sales trends across categories.

With all eyes on the Federal Reserve’s first interest rate cut expected on Wednesday, traders raised odds of a larger-than-usual 50 basis point cut to 67% from 50% on Monday, according to CME’s FedWatch tool.

The Bank of England also meets this week. Analysts widely expect policymakers to leave rates on hold, so investors will primarily be watching for clues about the BoE’s path for the rest of the year and updates on the pace of its bond sales.

UK inflation data due on Wednesday will also be closely watched for more indication of the BdE rate path.

Among individual operators, shares in gaming technology company Playtech ( LON: billion dollars) to Flutter Entertainment. Flutter shares rose 1%.

Shares in Essentra ( LON: ) fell 24% after the plastics and metal components supplier warned that full-year operating profit could miss market expectations due to weaker conditions in Europe and a slower recovery in the Americas.

Shares of e-commerce company THG fell 2.3 percent after the company said it is actively looking to spin off its technology services arm. ($1 = 0.8990 euros) (This story was amended to say Tuesday, not Monday, in paragraph 1)