FTSE 100 driven higher by commodity stocks

UK’s main stock indexes rose on Wednesday after a better-than-expected reading on business activity in November, while surging commodity stocks provided an added boost to the FTSE 100.

The blue-chip FTSE 100 rose 0.6% to touch a fresh two-month high, while energy stocks climbed 0.9% as crude oil prices inched higher on data showing a larger-than-expected U.S. crude drawdown.

Miners climbed 1.7%, extending Tuesday’s recovery.

Glencore (LON:GLEN) gained 3.9% after blank-check firm Metals Acquisition Corp agreed to an amended agreement to buy the global miner’s Cobar copper mine in Australia.

The “flash” or preliminary version of the IHS Markit/CIPS composite purchasing managers’ index (PMI) for Britain edged up to 48.3, while economists polled by Reuters had expected the flash PMI to fall again this month to 47.5.

However, the numbers showed British economic activity fell at close to its fastest pace in nearly two years in November, adding to signs of recession.

“Although business expectations rebounded from the 30-month low in October, which was probably linked to the improving domestic political situation, current activity remains under severe strain from weak confidence, cost pressures and tight financial conditions,” Kallum Pickering, senior economist at Berenberg, said.

Despite concerns about a potential recession, UK markets have recovered sharply from a selloff in October on hopes the new government leadership will reinstill confidence in the country’s fiscal health and that the U.S. Federal Reserve will slow its pace of interest rate hikes.

Global stocks were steady ahead of the Fed’s November meeting minutes due to be released later in the day.

Meanwhile, the Bank of England will press on with interest rate rises to battle inflation, with economists pricing in a 78% chance of a 50-basis point hike in December, according to a Reuters poll of economists.

The domestically focused FTSE 250 midcap index rose 0.2%.

Pets at Home Group fell 3.7% as the company said that Britons were buying fewer toys and other items for their dogs amid a cost-of-living squeeze.