FTSE 100 closes up 0.7% despite US inflation hitting 3.7% as Bank of England chief plays down four-hike fears

Wall Street tumbled and US rate-hike bets surged after American inflation jumped to 3.7% in September — its fastest pace since April — driven by soaring energy costs linked to the Iran war. London's FTSE 100 bucked the sell-off to close 74.53 points higher at 10,724.86, buoyed by a weaker pound that flattered earnings at global exporters. Bank of England chief economist Huw Pill poured cold water on market expectations of four rate rises totalling 100 basis points, saying he was "a little bit more sceptical." Chancellor John Healey's Budget, due October 28, is expected to finance new expenditure through tax rises or cuts rather than borrowing.

The probability of a Fed rate hike this month has risen to 40%, twice the level seen a week ago, with markets now over 90% certain of a rise by December.

The Nasdaq fell more than 1.6% and the S&P 500 dropped 0.9%, led by a sell-off in AI and tech stocks.

Sterling's slide boosted the translation of overseas revenues into pounds, lifting AstraZeneca, GSK, Unilever and Burberry among the top FTSE 100 gainers.