UK's FTSE 100 closes near record highs after labour data raises rate-cut bets

FTSE 100 Nears Record Highs as Labour Data Fuels Rate-Cut Speculation

(Reuters) -London shares gained on Tuesday, with the FTSE 100 within touching distance of its all-time high after soft labour market data added to bets of more interest rate cuts in the year, while investor attention remained on U.S.-China trade talks.

The blue-chip FTSE 100 closed 0.2% higher, sitting close to 20 points from its record close on March 3.

Data showed that pay growth in Britain slowed sharply and unemployment rose to its highest in nearly four years in the three months to April, paving the way for the Bank of England to cut interest rates further.

"The BoE sounded less sure of a cut in May, opening up the prospect of a pause in August, but today's data may tip the balance in favour of an August cut," said Elizabeth Martins, senior UK economist at HSBC Global Research.

Investors were also monitoring trade talks between the world's two biggest economies that extended to a second day, hoping for signs of thaw in a tariff war, which has begun to disrupt global supply chains and slowed economic growth.

The home construction and household goods sector led the gains on Tuesday, up 5.4%. It was driven by a 7.9% rise in Bellway after the homebuilder raised its forecast for the numbers of homes it expects to build this year.

Rivals Vistry and Persimmon were up 9.4% and 6%, respectively.

Energy shares climbed 3.5%, tracking higher oil prices.

Precious metal miners, however, posted heavy declines, down 4.8%. Hochschild Mining plunged almost 23% after issuing a six-week shutdown at its Mara Rosa mine, following lower-than-expected gold output by the end of May.

Mid-caps in London were up 0.5%, largely boosted by a 6.3% rise in Aberdeen after J.P. Morgan upgraded the fund manager's stock to "overweight" from "neutral".

(Reporting by Purvi Agarwal and Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar and Alex Richardson)