FTSE Close: London stocks climb as investors cheer by dovish central banks

London stocks rose on Wednesday, led by strong gains in travel, banking and consumer goods shares, as investors welcomed reassuring messages on inflation and interest rates from central banks.

The blue-chip FTSE 100 index closed up 0.3% at 7,515.38. The mid-cap FTSE 250 index ended 1.0% higher at 18,666.73, while the small-cap AIM All-Share finished 0.2% higher at 718.12.

British American Tobacco sank 8.4% to be the worst FTSE 100 performer. BATS took a £25 billion hit from its move away from traditional cigarettes. Alcohol maker Diageo lost 1.4% after UBS cut it to “sell” citing valuation worries. Energy giants Shell and BP tracked 1-2% lower in line with weaker oil.

On the upside, TUI soared 15% as the holiday company swung to a €551 million profit amid a travel rebound. Mortgage lender Paragon jumped 8.4% as underlying profit surged 25%.

In deals, small-cap bowling group Ten Entertainment agreed to a £287 million takeover from Trive Capital. Ten Entertainment’s shares rose 32% on the offer.

Other notable mid-cap gainers included WH Smith, Softcat and Virgin Money UK, which rose 4-7% apiece.

The gains show investors shrugged off mounting worries over corporate earnings and the economic outlook amid the reassuring messages from central banks. More consumer and travel-related firms led the risers, suggesting hopes for higher spending.