London stocks experienced a slight increase in volatile trading on Tuesday as investors prepared for an eagerly awaited budget this week, anticipated to feature substantial tax measures, while important U.S. economic data also captured attention. The blue-chip FTSE 100 edged higher by 0.2% as of 10:50, while the FTSE 250 index of domestically oriented UK firms rose by 0.1%. Among sectors, non-life insurers fell 3.3% after specialty insurer Beazley plunged 9.4% following the company’s reduction of its annual insurance written premiums forecast, while the travel and leisure sector declined 1%, with cruise operator Carnival reporting a drop of 5.5%. Banks gained 0.3% indicating that the sector would be spared from taxes, with Lloyds rising 1.8%, Barclays adding 1.1%, and NatWest climbing 1.4%.

Industrial metal miners gained the most, rising 1.1%, after copper and iron ore prices increased, with Antofagasta up 2.7% and Anglo American adding 2.2%. The personal goods sector gained 1.1%, with Burberry increasing 1.6%. Retailers added 1%, with Kingfisher climbing 4.7% after raising its annual profit forecast. Among other moves, food catering firm Compass Group shares fell 2.7% after the company forecast profit growth and organic revenue growth for 2026 roughly in line with expectations, while Domino’s Pizza Group lost 3.6% after Andrew Rennie stepped down, marking another senior departure as the company shifts strategy to tackle weak sales and rising costs.

AO World rose 5.9% after the company raised its annual profit forecast for the second time in three months. Investors are closely monitoring the upcoming UK budget announcement from Finance Minister Rachel Reeves on Wednesday, as mixed signals regarding potential tax increases have emerged. The government currently seems to be steering away from raising income tax; however, increases in various other levies are anticipated. Markets are also watching the broader backdrop as the Week in Breakingviews newsletter highlights financial insights and perspectives from Reuters’ global commentary team, reflecting the heightened interest in fiscal developments.

Markets are anticipating the upcoming release of a producer inflation report and retail sales figures in the U.S., marking one of the initial significant datasets to emerge after the unprecedented duration of the government shutdown. With investors weighing domestic tax policy uncertainties alongside key U.S. economic indicators, the overall market sentiment remains cautious yet responsive to sector-specific developments and global data cues influencing short-term risk appetite.