Energy shares drive FTSE 100 gains as inflation eases

(Reuters) -Energy shares led Britain's benchmark stock index higher on Wednesday, as a softer-than-expected inflation print lifted investor sentiment.

The blue-chip FTSE 100 index advanced 0.3%, recovering from early losses, while the midcap index was unchanged on the day.

The gain for the FTSE 100 extended Tuesday's rally, which followed U.S. President Donald Trump's hints at potential exemptions for auto-related tariffs.

The energy sub-index climbed 2.7% as oil prices rose around 1%, with the market drawing some strength from the possibility of trade talks between China and the United States and a report that Iraq will cut oil production in April.

Gold miners shone as prices of the precious metal crossed $3,300 for the first time on safe-haven demand. Endeavour Mining led blue-chip gainers with a 6.3% rise, while Hochschild was among the best performers on the midcap index, advancing 5.5%.

British inflation fell to a three-month low of 2.6% in March, but experts warned the relief precedes April's utility bill increases and employer tax hikes that could push the rate back to 3%.

The Bank of England remains cautious ahead of its interest rate decision next month as U.S. tariffs could add further uncertainty to the economic outlook.

Limiting overall gains, Bunzl slumped 25.3% and posted its worst day on record after cutting its 2025 forecast and pausing its share buyback programme.

Retailer WH Smith fell 1% after reporting a slight dip in first-half profit, although it said it still expects to meet full-year market expectations.

Shares of nanotechnology tools maker Oxford Instruments jumped 7.7%, the best individual performer on the midcap index. The company gave an annual profit forecast in line with expectations.

(Reporting by Nikhil Sharma and Ragini Mathur in Bengaluru; Editing by Shounak Dasgupta, Kirsten Donovan)