London stocks rose sharply on Tuesday as soft UK consumer inflation data reinforced expectations that the Bank of England could cut interest rates in March.
The FTSE 100 gained 1.0% to a new record high of 10,672, while the FTSE 250 added 0.3% to 23,617.45.
UK consumer prices fell 0.5% month on month in January, reversing December’s 0.4% rise, while annual inflation eased to 3.0% from 3.4%, in line with forecasts. Food and non-alcoholic beverage inflation slowed to 3.6% from 4.5%, and core CPI rose 3.1%, down from 3.2%.
Markets now see an 85% chance of a rate cut in March, with some investors even speculating that three cuts could be possible this year, though nothing is certain.
Miners and defence stocks led gains on the FTSE 100.
Antofagasta jumped 4.2% despite reporting an 11% fall in copper output to 851,600 tonnes for 2025, with the company setting a long-term target of 1.6 million tonnes by 2035.
BAE Systems gained 3.8% after reporting higher 2025 profit and confident growth plans. Glencore rose 2.2% after swinging to annual profit and reporting increased revenue.
Other strong performers included Anglo American, up 2.9%, Rolls-Royce up 2.5%, and Babcock up 1.8%.
Diageo was the weakest FTSE 100 stock, falling 2.2.
On the FTSE 250, Pan African Resources climbed 3.2% after reporting a surge in half-year profit to $209.9 million and revenue more than doubling to $487.1 million. The gold producer declared an interim dividend of 12 South African rand cents, compared with no payout in the prior period
On AIM, Seeing Machines fell 20% after projecting lower first-half revenue of $23.4 million to $24.0 million, down from $25.3 million the previous year. The company expects a narrower adjusted loss and positive adjusted EBITDA in the third quarter and second half
In the US, futures pointed to a slightly higher open with the Dow Jones, S&P 500 and Nasdaq all called up 0.4%.