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FTSE 100 Live: UK growth weaker than expected in July, shares higher

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July GDP figure adds to recession fears

The 0.2% month-on-month rise in GDP for July was smaller than the forecast 0.4%, adding to the City’s recession fears as activity levels continue to be impacted by high inflation.

Capital Economics thinks GDP will fall by at least 0.2% quarter-on-quarter in the three months to the end of September.

Its chief UK economist, Paul Dales, said: “The disappointingly small rebound in real GDP in July suggests that the economy has little momentum and is probably already in recession. The government’s utility price freeze is unlikely to change that.”

With underlying inflationary pressures still growing, the consultancy expects the Bank of England will raise interest rates by at least 0.5% at the meeting rearranged from this Thursday to 22 September.

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FTSE 100 higher, Serco shares fall on CEO departure

Support from the mining sector means the FTSE 100 is 49.03 points higher at 7400.17, with the best performing stocks including Glencore and Anglo American following gains of 2%.

The fallers board included housebuilders Persimmon and Barratt Developments after analysts at Berenberg downgraded their recommendations on the pair to “hold”.

The FTSE 250 index rose 56.62 points to 19,244.65, led by Ukraine-based iron ore company Ferrexpo. Investors were encouraged by weekend reports of a counter-offensive in the east of the country, leading shares 11% or 17.1p higher at 173.2p.

Serco shares were 5.1p lower at 175.1p after the outsourcing giant announced that Rupert Soames is to step down as chief executive at the end of the year. He will be succeeded by Mark Irwin, who is currently the CEO of Serco’s UK & Europe Division.

On the contribution of Soames, chairman John Rishton said: “Serco is unrecognisable from the business that he joined in 2014.”

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FTSE 100 seen higher, oil below $92 a barrel

The FTSE 100 index is expected to open higher after Wall Street’s S&P 500 and Nasdaq finished Friday’s session up by around 2%.

CMC Markets sees the FTSE 100 trading 29 points higher at 7380, building on the 1.2% improvement posted at the end of last week.

Inflation figures in the US on Tuesday will be a big factor in the direction of markets later this week, particularly with the next Federal Reserve decision on interest rates due on 21 September.

Economists are forecasting a fall in the annual rate of CPI to around 8.1% from 8.5% the previous month. This week also sees the release of the UK’s latest inflation number, which is forecast to show another reading above 10%.

Recent developments in the oil market have offered some encouragement on the inflation front, however, with the price of Brent crude below $92 a barrel this morning.

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