(Reuters) -Bank shares led British equities to close higher on Monday, rebounding from the previous session's selloff, as investors looked ahead to a potential interest rate cut by the Bank of England later this week.
The blue-chip FTSE 100 rose 0.7% after logging its biggest percentage drop in almost four months on Friday. The domestically focused midcap FTSE 250 also gained 0.7%.
British bank stocks surged 2.3% on Monday after the UK's Supreme Court overturned a ruling on motor finance commissions, easing fears of a redress scheme that some analysts had warned could cost tens of billions of pounds.
Lloyds Banking Group shares jumped 9%, hitting its highest level in 10 years. Close Brothers surged 23.5%, while Barclays rose 1.6%.
Precious metal miners gained the most among sectors, up 2.6%, tracking higher gold prices. [GOL/]
Aerospace and defence stocks gained 1.8%. Rolls-Royce was among the top gainers in the FTSE 100, up 2.3%.
BP rose 1.8% after the energy heavyweight said it has made its largest oil and gas discovery in 25 years offshore Brazil.
Conversely, Auction Technology Group's plunged 21.7% and was the top loser on the FTSE 250, after the online auction operator cut its annual profit margin forecast.
Senior slipped 3.5% even though the British engineering firm reported a 10% rise in first-half adjusted operating profit.
On the radar this week, the Bank of England is widely expected to cut its key interest rate to 4% from 4.25% on Thursday and to lower it once more before the end of the year, despite consumer price inflation rising to close to double the central bank's 2% target in June.
Meanwhile, a sharp downward revision to past U.S. jobs data last Friday, followed by President Donald Trump's decision to fire the head of Labor Statistics, added an extra layer of nervousness among investors over the credibility of U.S. economic data.
(Reporting by Sanchayaita Roy in Bengaluru; Editing by Vijay Kishore and Gareth Jones)
