LONDON: The UK’s FTSE 100 was subdued on Thursday as mixed earnings and worries about the economic outlook outweighed relief following the US Federal Reserve’s less hawkish comments that had spurred an overnight rally on Wall Street.

The blue-chip index closed flat at 7,345.25 points after notching a seven-week intraday high earlier in the session, while the domestically focused midcap index added 1.1%.

Banks weighed on Britain’s benchmark index, down 2.3%, with Barclays losing 4.6% after the lender’s first-half profit fell more than expected due to a 1.9 billion pound ($2.3 billion) hit for regulatory missteps.

Markets had taken some comfort earlier after the Fed on Wednesday raised interest rates as expected and eased some concerns over the pace of future rate hikes, but gloomy forecasts from Meta and Qualcomm and an early reading showing the US economy contracted again quickly soured sentiment.

“We really need to look at growth data and earnings and I do think the momentum there is somewhat slower ... that’s why we’re not chasing this rally and maintaining a defensive stance,” said Willem Sels, HSBC’s global chief investment officer for private banking and wealth.

Britain’s economy is under strain from an inflation rate that is heading for double digits, leaving the Bank of England in a dilemma about how aggressively it should raise interest rates at its August policy meeting next week.

“We expect the Monetary Policy Committee (MPC) to step up its fight against high inflation at its meeting,” Paul Dales, chief UK economist at Capital Economics, wrote in a note.

“The MPC may imply that it is willing to raise rates by 50bps at future meetings if there are no signs that domestic price pressures are easing.” Smith+Nephew fell 11.4%, the biggest FTSE 100 loser, after the medical products maker warned of a lower annual profit margin due to surging inflation and supply chain challenges.

Shell edged 0.3% up as the oil major reported a record quarterly profit of $11.5 billion, lifted by a tripling of refining profits and strong gas trading.

Johnnie Walker whisky maker Diageo climbed 2.6% after posting a 24% rise in full-year sales, as more people drank expensive spirits and bars reopened after pandemic lockdowns last year.

CMC Markets slumped 20.0% after the online trading platform warned of higher annual costs due to a weakening pound and higher professional fees and software expenses.