London's FTSE 100 finished higher on Thursday 12 November, closing up 0.25% at 10,863.09, as a run of strong company results and faster-than-expected economic growth lifted sentiment. The midcap FTSE 250 slipped 0.03% to 24,916.84.

The blue-chip index had climbed further in morning trading, rising 0.34% to 10,872.62 by 1131 GMT, before afternoon profit-taking trimmed the gains. Patrick Munnelly, partner for market strategy at TickMill Group, said UK equities had extended their recovery into a second session as blockbuster results from Burberry and B&M, major capital returns from Rolls-Royce and 3i, and resilient third-quarter GDP growth outweighed a broad slump in mining shares.

UK economy grows at fastest pace in two and a half years

Figures from the Office for National Statistics showed the UK economy grew by 0.7% in the third quarter, its fastest pace in two and a half years, supported by strong services activity and AI-related demand. The dominant services sector drove growth in the three months to September, with output rising 0.9%, helping to offset a 0.7% slide in construction, while production output edged up 0.1%.

Monthly GDP grew by 0.2% in September, compared with no growth in August. ONS chief economist Grant Fitzner said the economy grew robustly almost entirely due to strong and widespread growth in the services sector, adding that computer programming again increased strongly, registering its fastest growth in the last three years, with AI-linked businesses helping to boost the sector.

Susannah Streeter, chief investment strategist at Wealth Club, said the figures marked quite a turnaround for an economy long tarnished with a reputation for sluggishness, but added that the pace of growth could also cement expectations for an interest rate rise in February, as Bank of England policymakers fret about rising inflation.

Burberry leads risers after return to profit

Burberry was the FTSE 100's top riser, closing 8.01% higher at 1,180.50p after the luxury fashion house said it had swung to an interim pre-tax profit of £19 million from a loss of £48 million a year earlier. Comparable retail sales grew 4% in the second quarter ended 26 September, better than analysts' expectation of 3% growth, while adjusted operating profit for the first half of fiscal 2027 was £62 million, beating the average analyst estimate of £44 million.

Chief executive Joshua Schulman said Burberry had won customers by offering a range of prices within each category, including entry-level options, with sales in the Americas up 11% and Greater China sales up 5% in the quarter.

Rolls-Royce rose 2.01% to 1,369.60p after the engine maker announced a £1.5 billion share buyback and said strong progress in the second half gave it further confidence in full-year guidance of £4.7 billion to £4.9 billion of underlying operating profit and £3.8 billion to £4 billion of free cash flow. Investment group 3i gained 5.65% to 2,710.00p.

In the FTSE 250, discount retailer B&M European Value Retail jumped 20.93% to 337.40p after introducing guidance for its 2027 financial year and saying its back-to-basics campaign was bearing fruit. Housebuilder Persimmon rose 3.23% to 1,293.00p after saying it still expects to trade in line with expectations despite pressures on buyers.

Miners and Dr Martens drag

Not all shares shared in the gains. Bootmaker Dr Martens tumbled 14.67% to 54.10p after conceding that its first-half performance had been disappointing, with group revenue down 9% at constant currency. Gold miner Endeavour Mining fell 8.46% after saying it sees full-year gold production at the lower end of its outlook, while precious metals miner Fresnillo lost 2.98% as gold and silver prices fell.

Energy giants Shell and BP each inched 0.6% lower, tracking lower crude oil prices, while industrial metal miners dipped 0.6% as base metal prices, including copper, fell. Healthcare heavyweights AstraZeneca and GSK climbed 0.9% and 1.1% respectively, and the aerospace and defence sector gained 1.4%.

Overseas, news was dominated by Nvidia co-founder and chief executive Jensen Huang resigning with immediate effect, days after it emerged he had been in a relationship with a woman suspected of being a Chinese spy. The news initially sent shares in the $4.2 trillion chip giant sharply lower before the stock started to rebound. Huang, who led the company for more than 30 years, is being replaced on a temporary basis by chief financial officer Colette Kress.

Investors will now watch whether the FTSE 100 can hold above the 10,800 level, and whether the strong run of earnings and the resilient GDP data are enough to keep London's recovery going into the end of the year.

Sources: Reuters and Hargreaves Lansdown (Sharecast)