Mid-cap stocks in the United Kingdom rose on Friday, with beaten-down sentiment boosted by statistics showing the British economy fared better than predicted in the second quarter, while traders remained cautious.

The blue-chip FTSE 100 index in London rose 0.2%, helped by a 0.6% rise in pummeled bank stocks.

After losing more than 10% over the last six sessions, the domestically focussed FTSE 250 index surged 2.3% despite a 21.3% plunge in cruise operator Carnival PLC after it forecast a loss for the fourth quarter amid rising costs.

Holiday group TUI dropped 10.1%.

The Office for National Statistics said economic output in Britain unexpectedly rose by 0.2% in April through June, revised upward from a previous reading of a 0.1% contraction, but remained below its pre-pandemic peak.

“The real test is yet to come. The full extent of sky-high inflation and now increased borrowing costs will only begin to be truly felt in the second half of the year,” Danni Hewson, financial analyst at AJ Bell, said.

“Even with the government’s energy support package, many households will see their bills shoot up, leaving them less cash to pay for any of those discretionary goods and services that help UK PLC soar.”

On the quarter, the FTSE 100 fell 3.8%, extending declines to a second straight quarter amid fears of a hit to economic growth from tighter monetary policy to curb surging inflation.

Some hefty declines came in the last week after the government unveiled a ‘mini-budget’ which proposed unfunded tax cuts. The subsequent sell-off in gilts forced the Bank of England to step in with emergency bond buying measures to calm the markets, helping the pound off record lows.

Joules Group surged 26.0% on Friday as the struggling British fashion retailer said that its turnaround plan was making good progress.