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Tesco ( TSCDF ) climbs as it forecasts profit rise

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Stronger-than-expected U.S. CPI spurs risk-off mood

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IQE forecasts strong order book, shares up

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FTSE 100 up 0.3%, FTSE 250 adds 0.2%

(Updated at 1602 GMT)

By Sruthi Shankar, Khushi Singh and Pranav Kashyap

April 10 (Reuters) - UK equities closed Wednesday's

volatile session higher as investors pondered the outlook for

global rates after hotter-than-expected U.S. inflation data

tempered expectations the Federal Reserve would cut rates

several times this year.

The blue-chip FTSE 100 rose 0.3%, recovering from

losses of as much as 0.2% earlier the session, helped by a 3.3%

rise in Tesco ( TSCDF ) and banking stocks.

European markets recovered even as Wall Street indexes slid

1% after data showed U.S. consumer prices increased more than

expected in March, pushing investors to bet the Fed would delay

cutting rates until September.

"The reaction across markets has not been universal," said

Chris Beauchamp, chief market analyst at online trading platform

IG. "Faced with such an uncertain outlook for the US, where

valuations are much higher, investors continue to find the

unloved UK market a compelling destination."

Tesco's ( TSCDF ) stock rose by as much as 6.5% earlier to

touch its highest in nearly 10 years after Britain's biggest

retailer forecast a further rise in profit, citing early signs

of improving consumer sentiment.

The update lifted shares of other consumer companies

including Reckitt Benckiser ( RBGPF ), Tate & Lyle ( TATYF ) and

Sainsbury's ( JSNSF ).

Meanwhile, British banks and insurers

rose more than 1% each, supported by higher UK

government bond yields as traders bet on interest rates staying

higher for longer.

Money markets expect 56 basis points of interest rate cuts

by the Bank of England this year and they see a 52% chance of

the first cut arriving in June, according to LSEG data. That is

more than the 44 bps of U.S. rate cuts priced in by investors,

with the first cut from the Fed expected in July.

Britain's cost of living crisis shows signs of easing, an

FCA survey showed.

Investors will closely monitor the European Central Bank's

monetary policy decision on Thursday, and Britain's GDP figures

on Friday.

The domestically oriented FTSE 250 gained 0.2%.

IQE surged 28.8% after the chip components maker

forecast fiscal 2024 results to come within market expectations,

supported by an improving order book.