FTSE 100 Holds Steady Despite Weak UK PMI Data

The FTSE 100 index ended Wednesday's session virtually flat at 10,705.26 after an early surge and subsequent decline. The index initially climbed above 10,760 in morning trade due to falling oil prices and optimism over US-Iran diplomacy. However, the gains were short-lived as weak UK PMI data, showing slowing growth and input cost inflation, eroded investor confidence.

The flash composite PMI fell to 51.7 from 52.5 in August, while gilt yields rose during the session, with the UK 10-year yield climbing to around 5.36% late in the day. This increase in gilt yields indicates that markets are pricing in a higher chance of a Bank of England rate hike in November.

Despite the near-flat finish, the FTSE 100 outperformed its European peers, with banks and defence stocks providing support in the morning. The index's heavy weighting towards energy producers also helped cushion the impact of rising gilt yields.