Stock prices in London were higher on Thursday morning after figures showed that the UK’s economy climbed more than anticipated on-month in February; meanwhile Tesco enjoyed its best day since February as it published annual results.
The FTSE 100 index opened up 23.18 points, 0.3%, at 10,582.76. The FTSE 250 was up 132.89 points, 0.6%, at 22,798.48, and the AIM all-share was up 1.65 points, 0.2%, at 797.69.
The Cboe UK 100 was up 0.1% at 1,055.48, the Cboe UK 250 was up 0.7% at 19,877.30, and the Cboe small companies was up 0.3% at 17,995.61.
In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.
In the UK, economic growth accelerated in February, beating expectations on stronger services and production output.
Gross domestic product rose 0.5% in the three months to February 2026, up from 0.3% in the three months to January and ahead of the FXStreet-cited consensus of 0.3%.
Danni Hewson, AJ Bell head of financial analysis, said: ‘It feels almost cruel that the UK economy had managed to find a higher gear in February and grew faster than had been thought in the opening days of 2026.
‘After a disappointing end to 2025 which was one of the factors in the IMF’s calculations suggesting the UK economy will take the biggest hit of G7 countries because of the Iran war the start of this year had looked surprisingly buoyant.’
On a monthly basis, GDP increased 0.5% in February, accelerating from 0.1% growth in both January and December and exceeding expectations for a 0.1% rise. January was revised up from an initial flat reading.
Hewson added: ‘February’s growth does highlight the resilience of the UK economy, but the picture painted by these figures might as well be used to wrap up today’s chippy tea.’
Services output, the largest part of the economy, grew 0.5% in the three months to February, driven by wholesale & retail trade and information & communication. Production output rose 1.2%, supported by manufacturing and energy supply, while construction output fell 2.0%.
UK trade data showed a mixed performance in February, as higher imports outweighed a decline in exports. Goods imports rose by £2.3 billion, or 4.7%, driven by increased inflows from both EU and non-EU countries, while goods exports fell by £500 million, or 1.5%.
Trade with the US improved, with exports rising by £500 million and imports declining by £400 million.
In currency markets, the pound was quoted at $1.3566 early Thursday, slightly lower than $1.3577 at the London equities close on Wednesday. Against the euro, sterling edged down to €1.1501 from €1.1502 a day prior.
The euro traded at $1.1795 early Thursday, down from $1.1805 late Wednesday. Against the yen, the dollar was quoted at JP¥158.81, lower than JP¥158.97.
The Iran war remained in focus. The Trump administration said it feels ‘good about prospects of a deal’ with Iran, with the White House noting that a potential second round of talks would likely be held in Pakistan.
Iran’s foreign minister said Tehran remains committed to promoting peace after meeting Pakistan’s military chief, who is seen as a key intermediary.
At the same time, Iran’s military threatened shipping in the Red Sea if the US continues its blockade of Iranian ports. US Central Command said the blockade had ‘completely halted’ Tehran’s economic sea trade, while Iranian media reported that four vessels had travelled to and from the country.
Elsewhere, Israel’s security cabinet met to discuss a possible ceasefire in Lebanon, according to an Israeli source, as its military continued bombardments targeting Iran-backed Hezbollah.
Brent was trading at $95.76 a barrel early Thursday, up from $95.40 late Wednesday.
On the FTSE 100, Tesco shares rose 3.3%, marking their best day since February, as the grocer reported revenue excluding VAT but including fuel in the year ended February 28 rose 5.4% to £73.71 billion from £69.92 billion.
Pretax profit climbed 8.5% to £2.40 billion from £2.22 billion.
Tesco increased its annual dividend by 5.8% to 14.5 pence from 13.7 pence and announced a £750 million share buyback to be completed by April 2027.
It also upgraded its medium-term free cash flow guidance to £1.5 billion to £2.0 billion, from £1.4 billion to £1.8 billion.
The company said it is providing ‘a wider range of guidance than we were previously planning’ due to the conflict in the Middle East. ‘Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly,’ Tesco said.
At the top of the FTSE 100, Entain rose 4.0% after the Ladbrokes and Coral owner reiterated its outlook for net gaming revenue growth this year.
ConvaTec Group was at the bottom of the index, with shares trading ex-dividend, meaning new buyers will not receive the next dividend payment.
On the FTSE 250, budget airline easyJet fell 1.4% after issuing a trading update, noting that the Middle East conflict has introduced further uncertainty into the near-term outlook.
easyJet expects a headline pretax loss of £540 million to £560 million for the six months to March, with the underlying result ‘broadly in line’ with expectations as revenue and costs track forecasts, excluding around £25 million of additional fuel costs in March linked to the Middle East conflict and a net £30 million increase in legal provisions.
Fuel costs remain a key uncertainty. The company said it is 70% hedged for the second half at $706 per metric tonne, compared with current spot prices of around $1,500. It added that every $100 movement in fuel prices equates to around £40 million of cost in the second half.
Ashmore Group was at the bottom of the FTSE 250, down 6.5%, after the emerging markets fund manager reported quarterly outflows and said some investors are taking a ‘wait and see’ approach.
Among other movers, Beauty Tech Group rose 2.0% after reporting strong revenue and profit growth in 2025 and saying it expects profits to beat expectations in 2026.
Revenue increased to £141.0 million from £101.1 million, driven by a 60% rise in own-brand revenue to £140.9 million. Pretax profit jumped to £15.2 million from £5.1 million.
The company said trading in early 2026 is ‘encouraging’, with strong growth across its core business. It expects 2026 revenue to be in line with market consensus of £160.0 million, while profit is set to come in ahead of expectations, helped by the absence of IPO-related costs.
In Asia on Thursday, the Nikkei 225 index in Tokyo ended up 2.4%. In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong ended up 1.5%. The S&P/ASX 200 in Sydney closed down 0.3%.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.2%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.6%.
The yield on the US 10-year Treasury was quoted at 4.27%, narrowing from 4.29%. The yield on the US 30-year Treasury was quoted at 4.89%, unchanged from Wednesday.
Gold was quoted at $4,823.54 an ounce early Thursday, higher than $4,802.65 on Wednesday.
Still to come on Thursday’s economic calendar are eurozone CPI, US weekly jobless claims, US industrial production and US EIA natural gas stocks.
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