(Bloomberg) -- The UK’s blue-chip stock index was set to close at an all-time high, boosted this year by defense-related stocks as well as broader optimism about potentially lower interest rates.

The FTSE 100 rose 0.8% to 8,015.63 points Tuesday, surpassing its previous record closing peak of 8,014.31 in February 2023. It is still trading below an intraday high of 8,047.06.

The index’s latest gains followed market closures on Monday and Friday due to the Easter holiday, and were partly driven by energy stocks as crude futures climbed to the highest level since October.

“There are pockets of value in the UK, specifically in the oil and real estate market,” said Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan Private Bank, in an interview.

UK exporters were also boosted by a weaker pound after better-than-expected US manufacturing data lifted the dollar.

The FTSE 100 is up 3% year to date, with just five stocks — drugmaker GSK Plc, jet-engine maker Rolls-Royce Holdings Plc, defense company BAE Systems Plc, information and analytics provider RELX Plc, and energy firm BP Plc —  contributing about 80% of the gains, according to data compiled by Bloomberg. The Euro Stoxx 50 Index has risen 13%.

Other European indexes including the Stoxx 600, CAC 40 and DAX have reached record highs over the past few months. The FTSE 100 has been a laggard, dragged by weakness in commodity sectors which have a 20% weight in the UK benchmark.

“We think that the outlook for the UK markets specifically is not as strong as for the rest,” added Lipikhina. “A better macro environment in China and stronger earnings growth are the drivers the UK market needs,” she added.

--With assistance from Michael Msika.

(Adds strategist comment, updates market prices.)

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