(Sharecast News) - London stocks managed a positive finish on Tuesday, underpinned by a strong showing among banking plays, after the latest government borrowing figures and manufacturing data was released earlier.
The FTSE 100 ended the session up 0.46% at 7,476.72, and the FTSE 250 was ahead 0.5% at 21,112.60.

Sterling was in the green as well, last rising 0.61% on the dollar to trade at $1.3249, and strengthening 0.6% against the euro to €1.2027.

"London's financial sector certainly liked Jerome Powell's more hawkish tone," said AJ Bell financial analyst Danni Hewson.

"The Fed chair's promise that if a more aggressive stance was needed to combat US inflation, he and his cohorts wouldn't shirk from it has been given a welcome respite to what was beginning to feel a lot like an economic version of Groundhog Day.

"Banks are up and big oil and many of the miners that have been enjoying the surge in commodity price of late are down."

Hewson added that, with no moves on a potential EU ban on Russian energy meanwhile, the price of Brent crude had levelled off, with the cash-strapped British motorist set to be "delighted" that the downs as well as the ups were filtering through to pump prices.

"Prices are the thing on everybody's mind as speculation mounts as to how high the UK's inflation number has really reached and exactly what Rishi Sunak is going to do about it.

"The Spring Statement is usually a rather limp affair, full of rhetoric and rather lacking in rabbits, but the Chancellor is being lobbied by all sides to bring his hat to the dispatch box tomorrow and deliver a 'mini budget' that goes someway to defusing the ticking bomb widely referred to as the cost-of-living crisis.

"Death by a thousand cuts is how it feels to the average consumer and businesses of every shape and size will be paying close attention to any small print in notes sent out by the Treasury in the hours that follow Mr Sunak's speech."

On the economic front, official figures from the Office for National Statistics earlier showed UK government borrowing falling in February.

The gap between spending and income came in at £13.1bn - down £2.4bn on the same month a year earlier, but marking the second-highest borrowing figure for February since records began in 1993.

It was above expectations of £8.5bn, as well as the Office for Budget Responsibility's forecast for £8bn.

The figures also showed that borrowing was now £25.9bn lower than the OBR expected for the year so far, however, and less than half of what was recorded last year, at £138.4bn.

Compared with February 2020, before the pandemic hit, borrowing was up £12.8bn.

Interest payments on government debt, meanwhile, surged 52.7% from a year ago to a record £8.2bn last month, amid soaring inflation.

"While the Chancellor can take heart from a decreasing deficit as he prepares for Wednesday's Spring Statement, recent geopolitical developments point to a tougher 2022-2023," said Martin Beck, chief economic advisor to the EY Item Club.

"Rising energy and commodity prices means inflation this year is on course to exceed the OBR's forecast by a significant margin.

"By depressing real income growth, high inflation will weigh on economic activity and employment, negatively affecting tax receipts."

Beck said it would also add further to the interest cost of inflation-linked gilts.

"Borrowing may also be lifted if the Chancellor responds to recent calls for more fiscal activism to alleviate cost of living pressures, such as cutting fuel duty or raising benefits.

"With so many moving parts, and uncertainty over how much of the recent strength in tax receipts will prove persistent, predicting the medium-term fiscal outlook is tricky.

"But we won't have to wait long for more clarity."

Elsewhere, the proportion of UK manufacturers expecting to raise prices in the next three months hit a record high in March, an industry survey revealed earlier, amid increasing inflationary pressures.

The Confederation of British Industry said the balance of manufacturers expecting to lift prices rose to +80, from +77 in February, hitting the highest level since the question was first asked in the survey in 1975.

Total order books, meanwhile, matched the record level seen in November last year at +26%, compared to +20% in February.

"It is positive to see that total order books remained strong in March, with export orders above normal to the greatest extent since March 2019," said Tom Crotty, group director at INEOS and chair of the CBI Manufacturing Council.

"Manufacturing output volumes also grew at a significant pace in the first three months of 2022.

"However, the Ukraine conflict has created further headwinds to an already challenging context for the manufacturing sector."

Crotty said the primary business focus was on supporting the humanitarian crisis and evaluating operations in Ukraine and Russia.

"But the shock to energy and other commodity markets, along with the potential for trade spillovers, will further add to the cost-of-living squeeze.

"Manufacturers will be looking to the upcoming Spring Fiscal Event to provide support through these challenges."

In equity markets, banks were well above the waterline, boosted by hawkish comments overnight from US Federal Reserve chair Jerome Powell.

HSBC was up 3.15%, NatWest Group advanced 3.1%, Barclays rose 2.59%, Lloyds Banking Group was 3.31% firmer, and Standard Chartered gained 2.61%.

In a speech at the National Association of Business Economics conference, Powell said the US central bank must move "expeditiously" to raise rates and possibly "more aggressively" as it looks to combat inflation.

Elsewhere, athleisure retailer JD Sports Fashion rallied 2.96% following well-received third-quarter earnings from Nike on Wall Street.

IT infrastructure provider Softcat rose 3.9% after it said first-half profit was ahead of its expectations and that the outturn for the full year would be ahead of previous estimates.

Sirius Real Estate gained 4.65% after saying it would convert its UK business to a real estate investment trust from 1 April.

On the downside, B&Q owner Kingfisher lost 6.32% after it said current-year first-quarter sales were down 8.1%, as it reported 2022 financial year profits a third higher.

Review platform Trustpilot tumbled 14.83% after it reported a jump in full-year revenue, but a widening of its pre-tax losses to $26.6m from $12.9m.

Auto Trader Group slid 4.38% after announcing the acquisition of Autorama - one of the UK's largest marketplaces for leasing new vehicles - for up to £200m.

In broker note action, TP ICAP jumped 12.02% after an upgrade to 'buy' from 'hold' at Shore Capital, while Diploma was knocked 5.78% lower by a downgrade to 'underweight' from 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,476.72 0.46%
FTSE 250 (MCX) 21,112.60 0.50%
techMARK (TASX) 4,335.94 -0.16%

FTSE 100 - Risers

Prudential (PRU) 1,128.50p 4.11%
Aviva (AV.) 440.70p 3.38%
Lloyds Banking Group (LLOY) 50.24p 3.31%
HSBC Holdings (HSBA) 516.60p 3.15%
NATWEST GROUP PLC ORD 100P (NWG) 222.50p 3.10%
JD Sports Fashion (JD.) 153.30p 2.96%
Melrose Industries (MRO) 133.80p 2.76%
Standard Chartered (STAN) 519.20p 2.61%
Legal & General Group (LGEN) 279.60p 2.61%
Barclays (BARC) 172.86p 2.59%

FTSE 100 - Fallers

Kingfisher (KGF) 272.90p -6.32%
Auto Trader Group (AUTO) 646.80p -4.38%
Fresnillo (FRES) 720.00p -3.88%
Endeavour Mining (EDV) 1,865.00p -2.36%
CRH (CDI) (CRH) 3,308.00p -2.27%
Rightmove (RMV) 659.20p -1.88%
Rio Tinto (RIO) 5,709.00p -1.64%
Coca-Cola HBC AG (CDI) (CCH) 1,661.00p -1.63%
Croda International (CRDA) 7,400.00p -1.60%
B&M European Value Retail S.A. (DI) (BME) 577.40p -1.47%

FTSE 250 - Risers

TP Icap Group (TCAP) 133.30p 12.02%
Ultra Electronics Holdings (ULE) 3,342.00p 5.76%
Hammerson (HMSO) 32.05p 5.08%
Lancashire Holdings Limited (LRE) 396.00p 4.93%
Sirius Real Estate Ltd. (SRE) 126.00p 4.65%
National Express Group (NEX) 234.00p 4.65%
Aston Martin Lagonda Global Holdings (AML) 945.80p 4.00%
Safestore Holdings (SAFE) 1,320.00p 3.94%
Softcat (SCT) 1,786.00p 3.90%
UK Commercial Property Reit Limited (UKCM) 84.00p 3.83%

FTSE 250 - Fallers

Trustpilot Group (TRST) 137.80p -14.83%
Diploma (DPLM) 2,582.00p -5.78%
Morgan Advanced Materials (MGAM) 304.00p -4.40%
Helios Towers (HTWS) 120.80p -4.13%
Hochschild Mining (HOC) 125.10p -3.77%
Auction Technology Group (ATG) 1,012.00p -3.62%
3i Infrastructure (3IN) 336.50p -3.44%
Oxford Instruments (OXIG) 2,105.00p -3.22%
Centamin (DI) (CEY) 86.74p -3.11%
Tullow Oil (TLW) 50.94p -2.86%