Financials drive FTSE 100 to 1-month high after hawkish signals from Yellen.

U.K. stocks pushed higher on Wednesday, with financials leading the charge north after hawkish signals from the U.S. Federal Reserve’s Janet Yellen.

The FTSE 100 index UKX, +0.57%  rose 0.4% to 7,298.70, setting it on track for its highest close since Jan. 16. The London benchmark on Tuesday fell for the first time in six sessions, after choppy trading driven by lower-than-expected inflation data and a round of corporate news.

On Wednesday, banks and insurers were in the driving seat after Fed Chairwoman Yellen signaled the U.S. central bank could raise rates sooner rather than later. Higher interest rates tend to benefit the financial sector, as they can charge more for their loans. Coming from the world’s largest economy, U.S. interest rates are a driving force for sentiment across other markets.

Among U.K. banks, shares of Standard Chartered PLC STAN, +1.63%  gained 1.8%, Barclays PLC BARC, +1.93% BCS, +1.56%  added 2%, Royal Bank of Scotland Group PLC RBS, +1.87% RBS, +2.37%  climbed 1.9%, and Lloyds Banking Group PLCLLOY, +1.93% LYG, +0.30%  rose 1.9%.

On Wednesday, Yellen will speak again, when she gives her semiannual testimony before the House Finance Services Committee at 10 a.m. Eastern Time, or 3 p.m. London time.

FTSE 250: The U.K.’s mid cap index, the FTSE 250 MCX, +0.23%  , rose 0.1% to 18,810.12, set for a fresh record close. The benchmark has now risen for seven straight sessions, buoyed by economic data showing the British economy is holding up well despite the country’s Brexit vote.

Movers: In other sectors, shares of Anglo American PLC AAL, +0.68%  put on 0.7%. The move came after its Johannesburg-listed subsidiary Anglo American Platinum Ltd. AMS, -1.51%  swung to a profit in 2016, as its restructuring efforts started to bear fruit.

Economic news: The U.K. unemployment rate stayed at 4.8% in the three months to December, remaining at its lowest level since 2005.

Meanwhile, U.K. wage growth slowed to 2.6% from 2.7%. With consumer prices rising 1.8% in January compared with 1.6% in December, the data show inflation is now beginning to eat into wage growth, a sign that British consumers may rein in their spending.

The pound GBPUSD, -0.3610%  dropped to $1.2435 after the report, down from $1.2467 late Tuesday in New York.