(Reuters) - UK stocks climbed on Monday after a record-setting rally on Wall Street helped outweigh concerns about a slowing British economy and sticky inflation, while homebuilders advanced with Persimmon leading the outperformance in the sector.
The blue-chip FTSE 100 (.FTSE), rose 0.4%, while the midcap index FTSE 250 (.FTMC), jumped 1.1% to log its best day in a month.
Homebuilders (.FTNMX402020), led the gains among sectors with a 2.5% jump boosted by Persimmon (PSN.L), and Barratt Developments (BDEV.L), which rose 3.3% and 2.9%, respectively.
Industrial metal miners (.FTNMX551020), fell 2.2% to an over four-month low on poor demand prospects, particularly in top consumer China.
"The weakness in China is translating into similar weakness in basic resources and helps to explain to some extent why the FTSE 100 has struggled this year and is down over 3% so far this month," said Michael Hewson, chief market analyst at CMC Markets UK.
Both the UK indexes marked their third consecutive weekly declines on Friday after a stronger-than-expected inflation reading and slump in December retail sales raised concerns about a potential recession and complicated the outlook for interest rates.
A Reuters poll found that it is a close call whether the Bank of England starts trimming borrowing costs next quarter or in July-September, with only a slim majority of economists expecting it to do so before July as inflation falls towards its target.
Barclays (BARC.L), climbed 2.8% after Morgan Stanley said it expects the British lender to give a three-year guidance with increased clarity on distributions policy when it releases its full-year results next month.
S4 Capital (SFOR.L), was down 8.3% after rising earlier in the session. Martin Sorrell's digital advertising group issued a fourth-quarter trading update that was in line with its previous forecast.
Meanwhile, Wall Street's benchmark S&P 500 (.SPX), hit a record high in yet another session, extending a bull-market run into a new week.