By Sruthi Shankar and Shristi Achar A
(Reuters) - Britain's FTSE 100 was flat on Friday with investors cautious ahead of major central bank decisions next week, while shares of Rolls-Royce (LON:RR) slumped on a warning from the engineering company's top boss.
The blue-chip FTSE 100 index was flat, while the midcap FTSE 250 index added 0.6%, propped up by gains in rate-sensitive real estate and financial firms.
Major central banks including the U.S. Federal Reserve, the European Central Bank and the Bank of England (BoE) will announce monetary policy decisions next week, with traders betting on a 50-basis-point rate hike from the BoE.
"The UK has its own set of unique and partly self-inflicted issues that do make things a bit more difficult from the political and economic perspective. We may start to see a change in that the BoE might be a little bit more cautious," said Lewis Grant, senior portfolio manager for global equities, Federated Hermes.
Aerospace company Rolls-Royce dropped 2.9% after its new CEO Tufan Erginbilgic told its staff at the main British site in Derby, central England, that the company's performance was "unsustainable" and it faced a "last chance" to change.
The energy sector however added 1.2% to the commodity-heavy FTSE 100 index as oil majors BP plc (LON:BP) and Shell (LON:RDSa) plc rose.
"Energy stocks are still very constructive; we still see supply of oil being somewhat restricted by war in Ukraine, while energy companies are still generating a lot of cash and being able to pay dividends," said Marija Veitmane, senior multi-asset strategist at State Street (NYSE:STT) Global Markets.
Weakness in the materials sector as well as consumer staples firms such as Diageo (LON:DGE) capped gains on the FTSE 100 index.
Among company news, Sainsbury's rose 5.5% to the top of the FTSE 100 after Bestway amassed a 3.45% stake in Britain's second-largest supermarket group, but said it is not considering a takeover offer.
Superdry tumbled 17.7% after the fashion retailer profit forecast for the year and forecast to broadly break-even as its wholesale segment underperformed.