Banks, consumer stocks lift UK shares; investors unmoved by fresh tariff threats

By Sanchayaita Roy

(Reuters) -London stocks rose on Friday, led by banks and consumer discretionary shares, while investors showed little reaction to fresh tariff threats from U.S. President Donald Trump.

The benchmark FTSE 100 gained 0.8% and posted a weekly gain of 0.74%. The mid-cap FTSE 250 rose 0.4% on the day, and was also up 0.4% over the week.

Heavyweight bank stocks rose 1.7% after Citigroup strategists kept their "overweight" recommendation on Europe's banking sector. 

HSBC and NatWest were among its top picks, and their shares were 1.3% and 3% higher, respectively.

Travel and leisure stocks added 1.6%, led higher by a 4% gain for InterContinental Hotels Group after JPMorgan double upgraded it to overweight from underweight. IHG was the top percentage gainer on the FTSE 100.

Oil major Shell and BP rose 1.3% and 1.2%, lifting the broader energy index as oil prices climbed on Friday. [O/R]

Trade tensions resurfaced after Trump on Thursday announced a fresh round of punishing tariffs on a broad range of imported goods, including 100% duties on branded drugs.

Britain said on Friday it was engaging with Washington over the pharmaceutical measures, hoping for a favourable outcome.

The British pharma and biotech sub-index rose 0.6%.

"AstraZeneca could be better placed than some of its European rivals, due to promised extra investment in the United States," said Kathleen Brooks, research director at XTB, also highlighting Trump's promise to treat the UK differently on these tariffs.

"The FTSE 100 could be a relative 'safe haven' in the middle of this latest tariff storm."

AstraZeneca said on Friday it will sell its diabetes and asthma drugs direct to cash-paying U.S. patients at a discount of up to 70% off list prices.

Babcock rose 3.2% after brokerage Berenberg raised its target price on the stock.

According to a survey, Britain's longer-term inflation expectations rose to 4.1% in September, up from 3.9% in August. 

In the U.S., the latest inflation data met expectations, easing concerns that persistent price pressures could delay interest rate cuts by the Federal Reserve.

(Reporting by Sanchayaita Roy in Bengaluru, additional reporting by Purvi Agarwal; Editing by Shreya Biswas, Kirsten Donovan)