By Amal S and Anisha Sircar
(Reuters) -Mining and bank stocks supported London's FTSE 100 on Tuesday as metal prices and bond yields rose ahead of a widely anticipated Bank of England meeting later in the week.
The blue-chip FTSE 100 index gained 1.0%, while the banking sub-index rose 2.6%, tracking higher yields amid expectations of interest rate increases.
Two-year yields on British bonds hit their highest since 2011 amid expectations for a 50-basis-point rate hike from the Bank of England, its second increase in a row. [BOEWATCH]
"There seems to be renewed enthusiasm for some of the stocks investors had taken flight from in fright about the impact of higher interest rates on the value of future earnings," said Hargreaves Lansdown (LON:HRGV) analyst Susannah Streeter.
Miners Anglo American (LON:AAL), Rio Tinto (LON:RIO) and Glencore (LON:GLEN) were among the top gainers on the London blue-chip index, aided by stronger copper and gold prices. [MET/L] [GOL/]
"Miners have again been the stalwarts of the index, helped by a raft of robust commodity prices," Streeter added.
The FTSE 100 has steadily outperformed its peers in the developed world due to a stronger exposure to banking stocks, which tend to thrive in a tighter monetary policy environment.
The domestically focused mid-cap index was up 1.1%, with asset managers offering the biggest boost.
Soft drinks A.G. Barr gained 1.0% after raising its annual profit forecast and saying annual revenue was set to top pre-pandemic levels.
Virgin Money (LON:VM) UK rose 0.1%, after the British challenger bank said credit card spending was back to pre-pandemic levels thanks to pent up demand, while rising interest rates helped lift its margin forecast for the year.
Debt-laden Cineworld fell 4.0% after it said it had started talks with former shareholders of its U.S. business Regal Entertainment over a potential rescheduling of the British cinema operator's payment obligations.
Tesco (LON:TSCO), Britain's biggest retailer, climbed 1.0% after saying 1,600 roles were at risk of redundancy due to operational changes at stores.