By Devik Jain
(Reuters) -London's main indexes rose on Wednesday as financial stocks gained and strong results from companies including WH Smith (LON:SMWH) lifted sentiment ahead of the U.S. Federal Reserve meeting later in the day.
The blue-chip FTSE 100 was up 1.2% and the domestically focussed mid-cap FTSE 250 index advanced 1.4% after logging six straight sessions of losses amid fears of an economic slowdown.
Shares of Asia-focused bank HSBC gained 2.0% to provide the biggest boost to the FTSE 100 index.
WH Smith climbed 8.5% to the top of the FTSE 250 index after the retailer's quarterly revenue surpassed pre-pandemic levels.
The U.S. Federal Reserve is expected to announce its policy decision at 1800 GMT, with focus on how aggressive it would be on interest rate hikes to combat inflation at its highest in decades. Many fear drastic action would risk tipping the world into recession.
"The U.S. economy still has a bit more room for manoeuvre and, although a downturn is on the horizon, it's still more of a distant threat compared to in the UK where a recession is looming much larger," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown (LON:HRGV).
Meanwhile, the European Central Bank said it would skew reinvestments of maturing debt to help more indebted members and would devise a new instrument to stop fragmentation, seeking to temper a market rout that has fanned fears a new debt crisis.
The Bank of England will likely raise interest rates on Thursday by 25 basis points to 1.25% and stick to those increments in coming meetings despite inflation running close to double-digits, according to a Reuters poll of economists.
Whitbread (LON:WTB) added 6.3% after the Premier Inn owner reported higher first-quarter sales on a recovery in hotel stays in Britain and Germany.
Bloomsbury Publishing jumped 2.2% after the company reported a 40% jump in annual profit.