By Ankika Biswas and Shashwat Chauhan
(Reuters) -British equities climbed on Monday as Croda International led a rebound in the chemicals sector and Ocado (LON:OCDO) jumped following a brokerage upgrade, while investors eyed major central bank decisions on monetary policy later in the week.
The benchmark FTSE 100 edged 0.1% higher, while the more domestically-focussed FTSE 250 midcap index added 0.5%.
Croda International rose 3.2%, steering gains in chemical stocks, rebounding from Friday's tumble after a profit warning from the speciality chemicals group.
Ocado rose 3.6% after BNP Paribas (EPA:BNPP) Exane upgraded the online grocer's rating to "neutral".
A softer pound also helped the exporter-heavy FTSE 100. [GBP/]
On the downside, energy majors Shell (LON:RDSa) and BP (LON:BP) dipped 0.7% and 1.3%, respectively, as oil prices slipped. [O/R]
Investors will first assess fresh inflation data out of the United States on Tuesday for clues on the Federal Reserve's monetary policy decision a day later.
"A hike would take markets by surprise," said Steve Sosnick, chief strategist at Interactive Brokers.
"Even if they (Fed) don't hike, it will be a reflection of the pace of monetary policy going forward."
The European Central Bank is also set to announce its policy decision on Thursday, followed by the Bank of England next week.
UK equity markets have been range-bound of late as still-high inflation knocked up expectations of more monetary tightening pains.
Labour market and economic growth data this week will be crucial in understanding the state of the economy and the BoE's policy tightening path.
Among individual stocks, AO World jumped 7.8% after sportswear and fashion retailer Frasers Group acquired a 18.9% stake in the online electricals retailer.
Kainos (LON:KNOS) Group jumped 6% after brokerage Stifel upgraded the tech stock to "buy" from "hold".
London-listed shares of Carnival Corp (LON:CCL) soared 12.7% after JP Morgan upgraded the cruise operator's rating to "overweight".
Meanwhile, the Confederation of British Industry expects the economy to sidestep recession entirely this year. However, deep-rooted problems like weak business investment will persist, the trade body said.