Jan 2 (Reuters) - The UK's FTSE 100 edged higher on Thursday, the first trading session of the year, as a rise in commodity stocks helped offset declines in banking shares.
The blue-chip FTSE 100 (.FTSE), rose 0.5% by 1256 GMT, its highest in two weeks.
The FTSE 350 precious metals & mining index (.FTNMX551030), rose 2.2%, leading gains among sectors, as gold prices rose with investors focussing on the U.S. interest rate outlook and policies under incoming U.S. President Donald Trump.
Oil stocks such as BP (BP.L), and Shell (SHEL.L), rose more than 1% each, as crude prices , were buoyed by expectations of more stimulus for China's slowing economy.
On the flip side, lenders including HSBC (HSBA.L), Barclays (BARC.L), and NatWest Group (NWG.L), fell between 1% and 1.4%, capping gains in the main index.
The FTSE 100 recorded a 5% rise in 2024, its fourth consecutive year of gains, as the UK economy held up better than expected and the Bank of England kicked off monetary policy easing.
However, a survey on Thursday showed British factory activity shrank at the fastest pace in 11 months in December, as manufacturers cut staffing levels in response to higher taxes and weak foreign demand.
The BoE has said it will move gradually with further cuts to borrowing costs as it monitors whether the tax hikes announced in Finance Minister Rachel Reeves' budget add to inflation pressures.
Traders are pricing in more than 63 basis points in rate cuts after two cuts in 2024.
The FTSE 250 midcap index (.FTMC), slipped 0.2% after recording a 4.7% annual gain.
Reporting by Sruthi Shankar in Bengaluru; Editing by Vijay Kishore
