LONDON, March 22 — London’s blue-chip shares rose for a fifth straight session today, led by banks and insurance stocks, as investors awaited the release of inflation data and budget update on Wednesday.

The FTSE 100 index rose 0.5 per cent, hitting a three-week high after having recouped all of its year-to-date losses in the previous session.

Rate-sensitive banks added 2.7 per cent and insurers climbed 2.6 per cent, as bets of aggressive interest rates hikes by major central banks grew after US Federal Reserve Chairman Jerome Powell’s hawkish comments yesterday.

The benchmark 10-year gilt yield touched its highest since October 2018.

While a large presence of commodity and financial stocks has helped the FTSE 100 outperform its continental peers this year, investors worry that faster monetary policy tightening might stifle economic growth. Data due out on Wednesday is expected to show consumer prices hit a new three-decade high in March.

"Inflation will peak in a couple of months on a year-on-year basis. The reality is though the UK will end 2022 with an about 4 per cent inflation level, which suggests more rate rises in 2023,” said Chris Bailey, European strategist at Raymond James.

Investors are also awaiting finance minister Rishi Sunak’s budget update to parliament on Wednesday, with updated growth and borrowing forecasts set to be released.

"Spot the inevitable talk about sharply rising energy bills, surging inflation and National Insurance increases. However, let us not forget that there are local elections in the UK in early May, so it will not be too gloomy,” said Bailey.

UK’s oil & gas index inched up 0.2 per cent, as oil prices extended rise after some European Union members discussed a potential oil embargo on Russia.

Home improvement retailer Kingfisher KGF.L slid 2.5 per cent even as it reported record annual revenue and profit driven by the Covid-19 pandemic.

The domestically focussed midcap index was pulled higher by a 9 per cent jump in IT services and consulting firm Softcat Plc after its half-year earnings. — Reuters