London stocks extended gains on Thursday, as investors anticipated a ⁠Bank of England interest rate cut later in the day amid a sharp slowdown in inflation ⁠and signs of ‌weakening economic growth.

The UK's blue-chip FTSE 100 was up 0.3% at 1013 GMT, after ending higher in the previous session. The domestically-focussed midcap FTSE 250 index ⁠added 0.36%.

Meanwhile, the pan-European benchmark index was largely unchanged ahead of the European Central Bank's policy announcement on Thursday, which is widely expected to result in a decision to hold rates. The Bank of England is expected to cut rates by 25 basis ⁠points to 3.75%, marking its fourth ​reduction in 2025 and the lowest level in nearly three years, though still almost double the ECB's rate.

Inflation, which fell ‍to 3.2% in November, remains the highest among G7 economies partly due to last year's tax hikes, limiting the ​scope for aggressive easing. Investors are pricing in only one more cut in 2026, likely by April, despite a slight uptick in bets after the recent inflation drop. The FTSE 350 index of retailers led gains, up 0.9%. Currys jumped 10.3% after the electrical retailer reported a more than doubling in first-half profit. Frasers Group and Moonpig Group were up 2.2% and 1%, respectively.

Aerospace and defence stocks were also among the top gainers, up 0.8%.

Limiting overall gains, precious metal and mining stocks lost 0.4%, dragged by lower gold prices. Healthcare stocks also fell 0.4%.

The overall ⁠moves kept the FTSE 100 on track for ‌its best year since 2009, climbing about 20% year-to-date and outpacing Wall Street's benchmark S&P 500 index, which has risen 14.3% this year. Among individual stocks, Premier Inn owner Whitbread climbed 6% after ‌Corvex disclosed ⁠a stake and urged a strategic review, placing it at the top of the benchmark index.

(Reporting ⁠by Tharuniyaa Lakshmi and Nikhil Sharma in Bengaluru; Editing by Sonia Cheema)