UK midcaps climb, FTSE 100 flat a day after budget

(Reuters) -The UK's midcap index climbed on Thursday, hitting its highest in two weeks, a day after Finance Minister Rachel Reeves announced a big tax-raising budget.

The blue-chip FTSE 100 ended flat, while the domestically-focused FTSE 250 rose 0.9%, logging its fourth consecutive session of gains.

Demand for new homes could gradually recover next year, giving British homebuilders a much-needed boost, analysts and some investors said after Wednesday's budget cleared uncertainty that held buyers back.

Shares of homebuilders were up 2.1%, with Berkeley, Barratt Redrow and Persimmon gaining between 1.3% and 3.1% after falling in the previous session.

Beverages stocks added 1%, with Diageo rising 1.5%. Utilities gained 0.9%.

The real estate sector advanced 0.9%. Swiss bank UBS said Wednesday's budget was good news for real estate stocks.

British Land gained 2.7% while Segro added 1.6%. Heavyweight banks gained 1.1% with Barclays and NatWest Group rising 1.7% and 2.3% respectively.

On the flip side, the pharma sector lost 0.8% with AstraZeneca falling nearly 1%.

Industrial miners fell with Rio Tinto down 1.9%. Energy stocks declined 0.7%. BP fell 1.3%.

Reeves delivered a highly-anticipated budget on Wednesday that raised taxes and doubled her margin to meet Britain’s fiscal targets, known as headroom, even as welfare spending rises.

Big investors broadly welcomed the tax-raising budget but they warned it may not be enough if growth falters because tax hikes are due to kick in later.

Among other moves, shares of British gambling firms fell. Evoke PLC lost 4.1% and Rank Group declined 9.3%, reversing Wednesday’s rebound, after both companies warned that the plan to hike taxes on online gaming would hit profits.

However, gambling tech firm Playtech rose 8.6% and the company said it remains confident of meeting market expectations for 2026.

Unite Group fell 3.5% after the student accommodation developer warned of lower earnings in 2026.

Online fashion retailer Debenhams surged 57.8% on an upbeat profit forecast.

Severn Trent and 3i Group fell as they traded ex-dividend.

Also in focus were developments to end the war in Ukraine.

Markets in the U.S. are closed for the Thanksgiving holiday.

(Reporting by Sukriti Gupta in Bengaluru; Editing by Mrigank Dhaniwala and Ed Osmond)