Britain's FTSE 100 up nearly 1% with Labour favoured to win election

By Purvi Agarwal and Pranav Kashyap

(Reuters) -London's FTSE 100 closed nearly 1% higher on Thursday, boosted by gains in medical equipment company Smith & Nephew, while parliamentary polls in the country were underway with the Labour Party looking set to win.

The blue-chip FTSE 100 was up 0.9% and saw its best day in nearly two months.

The mid-cap FTSE 250 edged 0.4% higher at 20,610.34. Both indexes logged gains for the second consecutive day.

Polling for the parliamentary elections in the UK started at 0600 GMT and will continue throughout the day with an exit poll scheduled for 2100 GMT.

Opinion polls showed the Labour Party winning, replacing the Conservatives after 14 years. Investors believe the market has already priced in the change.

"Clearly a lot of optimism is driven by a dose of relief. The market’s long expected a strong Labour victory and if and when we see that – it will be one less thing for the market to worry about," Ben Laidler, head of equity strategy at Bradesco BBI.

"They (investors) are hopeful that they (Labour) come in with a pro growth, productivity led agenda and can make some progress,".

Trading activity in the session was low as the U.S. markets are closed for a holiday.

Medical equipment and services stocks gained 5.1%, the most among the sectors. Smith & Nephew shares jumped 6.9% after Cevian Capital disclosed a stake of about 5% in the company.

The automobile and parts sector climbed 1.7% after an industry body said the registration of new cars increased "slightly" in June and crossed the half-year "million motors" mark for the first time since 2019.

Among individual stocks, Barclays gained 2.8% after the bank said it has agreed to sell its German consumer finance business to BAWAG Group AG for a "small premium to net assets", payable in cash.

The market's complete response will be seen on Friday, as voting concludes at 10 p.m. BST (2100 GMT), when an exit poll will provide the first glimpse of the results. Detailed official outcomes are anticipated in the early hours of Friday.

"The UK stock market barely moved the last time the country switched from a Conservative to Labour government and the same might happen tomorrow if Keir Starmer’s party is declared victorious in the general election," said Dan Coatsworth, investment analyst at AJ Bell.

(Reporting by Purvi Agarwal and Pranav Kashyap in Bengaluru; Editing by Eileen Soreng and Janane Venkatraman)