U.K. stocks rallied on Tuesday while the British pound slipped as new data showed a cooling trend in the labor market, prompting traders to reassess their expectations for rate cuts.
The unemployment rate increased in January and wage growth slowed, leading to speculation that there will be three rate cuts from the Bank of England this year. The first one is expected to come in June.
The ILO jobless rate rose to 3.9 percent in three months to January from 3.8 percent in the prior period, the Office for National Statistics reported while analysts saw an unhanged reading.
The benchmark FTSE 100 was up 65 points, or 0.9 percent, at 7,735 after closing up 0.1 percent on Monday.
Energy stocks traded higher, with BP Plc rising 1.3 percent and Shell adding 0.8 percent as oil prices rose amid heightened geopolitical tensions in the Middle East.
TI Fluid Systems fell more than 1 percent after reporting its full-year earnings results.
Infrastructure products and services provider Hill & Smith jumped 3.6 percent after reporting record annual results.
Housebuilder Persimmon tumbled 3.7 percent after it narrowly missed market views for last year\'s pretax profit and revenue.