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Reports there could be a U-turn on tax package
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UK's Kwarteng says no change in his position
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FTSE 100 up 0.4%, FTSE 250 adds 1.9%
Oct 13 (Reuters) -
UK's FTSE 100 snapped a six-day losing streak on Thursday as a boost from reports the British government was discussing making changes to its fiscal plan overshadowed fears of aggressive U.S. interest rate hikes after red-hot inflation data.
The blue-chip FTSE 100 index rose 0.4% in a volatile trading session, while the midcap FTSE 250 added 1.9%.
The latter climbed as much as 3.2% earlier in the day, after Sky News reported that the government was looking at which parts of the tax-cutting package might be ditched in a further U-turn by Prime Minister Liz Truss.
"There is confidence that the government is finally taking heed of what the market has been trying to tell it these past couple of weeks," said Stuart Cole, head macro economist at Equiti Capital.
"Given the risk to Truss, I expect we will see measures announced that do not reverse totally what was announced in the mini-budget, but rather it will be made significantly less generous, just enough so that she can avoid losing too much face."
When asked about the reports, however,
Finance Minister Kwasi Kwarteng said
the government's position had not changed and that he remained focused on delivering the mini-budget and boosting growth.
UK assets have come under pressure since last month when the new government's economic plans, aimed at spurring growth, sparked concerns about how they would be funded and caused a sharp spike in borrowing costs.
Rate-sensitive banks and insurers , which have been clobbered in the last few sessions by the turmoil in bond markets, added 3.8% and 4.7% respectively.
The homebuilder index rose 4.1%.
The UK's main indexes pared their sharp gains from earlier in the day after data showing a hotter-than-expected rise in U.S. consumer prices last month added to investor worries about the impact of rising inflation and tighter monetary policies on corporate profits ahead of the earnings season in the U.S. and Europe.
Weighing on the FTSE 100 index, defensive consumer staples stocks such as Unilever and Diageo fell more than 2% each.
Airline easyJet gained 2.7% after saying bookings for the coming months were progressing well, with travel demand holding up for this winter and next summer.
