By Jeremy Cutler

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Blue chips in London faded into the close on Tuesday, ending little changed, as worries over economic growth and inflation overshadowed strong results from Kingfisher.

The FTSE 100 Index closed down just 3.36 points at 9,223.32.

The FTSE 250 ended 98.42 points higher, 0.5%, at 21,695.35, and the AIM All-Share closed up 3.72 points, 0.5%, at 781.25.

The Organisation for Economic Co-operation & Development (OECD) forecast UK inflation will reach 3.5% in 2025, 0.4 percentage points higher than its previous forecast, and the highest in the G7.

The OECD expects headline inflation to cool to 2.7% in 2026, still above the Bank of England’s 2% target, and only surpassed by the US in the G7.

The economic think tank raised its projection for economic growth in the UK to 1.4% in 2025 from the 1.3% it predicted in June but expects GDP growth to then slow to a paltry 1.0% in 2026.

The UK will be held back by “a tighter fiscal stance, higher trade costs and uncertainty” which the OECD said would “drag on external and domestic demand”.

The report came as figures showed economic activity grew at a slower pace than forecast in September.

According to S&P Global’s flash UK purchasing managers’ index report, the composite output index posted 51.0 points for September, its lowest reading in four months and easing markedly from a 12-month high of 53.5 in August. This underperformed against the 52.7 points reading forecast by the FXStreet-cited consensus.

The manufacturing PMI flash estimate was a five-month low of 46.2 points in September, down from 47.0 in August and missing the consensus forecast, which had expected no change, month-on-month.

Economists at Barclays said the report points to a broad-based weakening in private sector activity at the end of the third quarter.

“Labour market conditions remain soft, with the composite employment index signalling further reductions in headcount,” the bank noted.

But Barclays did point out that on inflation, the latest data offers encouraging signs.

“Both input and output price metrics declined at the composite level, indicating easing price pressures,” the broker explained.

In better news for the UK economy, fintech Revolut unveiled plans to invest £3 billion into its expansion in the country.

Chancellor Rachel Reeves welcomed the pledge at the opening of the financial firm’s new head office in London’s Canary Wharf.

“The UK is well and truly open for business under this Government,” she said.

Revolut’s cash injection, spread across five years, is set to go towards the creation of 1,000 jobs in the UK.

The pound was quoted higher at 1.3509 dollars at the time of the London equity market close on Tuesday, compared with 1.3501 dollars on Monday. The euro stood at 1.1792 dollars, higher against 1.1773 dollars. Against the yen, the dollar was trading at 147.87 yen, slightly higher compared with 147.84 yen.

In European equities on Tuesday, the CAC 40 in Paris closed up 0.5%, while the DAX 40 in Frankfurt ended 0.4% to the good.

Stocks in New York were mixed at the time of the London close. The Dow Jones Industrial Average was up 0.4%, the S&P 500 index was down 0.1%, and the Nasdaq Composite was 0.2% lower.

The yield on the US 10-year Treasury was quoted at 4.14%, trimmed from 4.15%. The yield on the US 30-year Treasury was quoted at 4.76%, narrowed from 4.77%.

On the FTSE 100, Kingfisher was the star performer, soaring 15% as it delivered better-than-expected interim results, coupled with an upgraded outlook.

The London-based DIY and home improvement retailer owns the B&Q, Screwfix, Castorama and Brico Depot brands.

It reported adjusted pre-tax profit of £368 million for the six months that ended July 31, which Deutsche Bank noted landed “significantly ahead” of the consensus of £326 million.

Kingfisher also said it is now targeting the upper end of its full-year guidance for adjusted pre-tax profit of between £480 million and £540 million. Last year, this metric was £528 million.

The results gave a boost to builders merchants, with Howden Joinery up 2.3%, Wickes up 2.9% and Travis Perkins up 3.3%.

The upbeat mood spilled over to the general retail sector, with Marks & Spencer up 2.3% and JD Sports up 1.7%.

But after a bright start Smiths Group closed down 3.4%.

The London-based engineering firm is preparing to break up the company and confirmed the separation processes for Smiths Interconnect and Smiths Detection are progressing, with an announcement on Smiths Interconnect expected by the end of 2025.

The news came alongside broadly in line results and guidance and saw the shares, which have risen 32% in 2025 so far, take a breather.

On the FTSE 250, Serco firmed 4.7% as it reported MT&S had secure a US Air Force contract as sole provider of training and simulator services.

Serco said the award to MT&S, which it bought from Northrop Grumman in May, has a ceiling value of 972 million dollars, or £720 million, over the next five years.

Gold continued its record-breaking run, trading at 3,778.27 dollars an ounce on Tuesday, up against 3,729.11 dollars on Monday.

Brent oil was quoted higher at 67.98 dollars a barrel on Tuesday, from 66.48 dollars late on Monday.

The biggest risers on the FTSE 100 were Kingfisher, up 36.9p at 289.1p, ConvaTec, up 6.8p at 238.8p, Antofagasta, up 58p at 2,418p, Howden Joinery, up 19.5p at 858p and Marks & Spencer, up 8p at 360.3p.

The biggest fallers on the FTSE 100 were Smiths Group, down 80p at 2,298p, St James’s Place, down 32.5p at 1,253.5p, AstraZeneca, down 242p at 11,258p, Babcock International, down 23p at 1,179p and British American Tobacco, down 74p at 3,897p.

Wednesday’s global economic calendar has an Australian inflation print overnight, plus US new home sales figures.

Wednesday’s UK corporate calendar has half-year results from sports clothing and footwear retailer JD Sports Fashion.

Contributed by Alliance News