London close: Commodities losses and Carillion fallout weigh on stocks

London's blue chip stocks failed to hold onto their early gains on Tuesday, as the drag from metals prices on mining heavyweights offset any benefit from a fall in the pound on the back of an easing in UK inflation.

The FTSE 100 closed down 0.2% to 7,755.93 though the mid-cap FTSE 250 index gained 0.2% to 20,877.30. The pound recouped earlier losses against the dollar to sink just 0.1% against the greenback at 1.3779 and climbed 0.1% versus the euro to 1.126.

Earlier, the consumer price index for December was revealed by the Office for National Statistics to have dropped back to an annual rate of 3.0% from 3.1% a month earlier, as forecast by economists. On a monthly basis, CPI rose 0.4%, as expected, after a 0.3% increase a month earlier.

Core CPI, which excludes more volatile prices such as food and energy, rose 2.5% year-on-year, less than the 2.6% expected and the prior month's reading of 2.7%. CPIH, the ONS's preferred measure of inflation as it includes owner-occupiers’ housing costs, fell to 2.7%, in line with the consensus forecast, and down from 2.8% a month before.

The pound fell slightly on data's suggestion that UK inflation may have peaked, but this was overridden by the weight of the mining sector losses.

Also worth considering were investors’ concerns about what Carillion’s collapse means for the UK economy, said analyst Connor Campbell at Spreadex.

Fallout from the collapse into insolvency of the former construction giant continued on Tuesday, with banks not expecting to get back much of Carillion's £1.6bn debt pile and suppliers hit by £1bn of unpaid bills.

A witness statement filed at the High Court by the group's interim chief executive Keith Cochrane revealed the expected recovery for creditors in the liquidation is 0.8p to 6.6p in the pound. Cochrane, Sky News reported, laid some blame on Royal Bank of Scotland for tightening the terms of its funding three days before the liquidators were called in, which he said represented "unilateral action which in the company's view undermined the group's efforts to conserve cash".

Miners were the worst performers on the FTSE 100 as copper and iron ore prices fell following recent gains, with Antofagasta, Anglo American and BHP Billiton all in the red. Iron ore, copper, crude and gold prices have all declined so far this week.

IG analyst Chris Beauchamp said: "It is more likely a pause before the next move higher - ongoing improvement in economic fundamentals means miners are still the place to be, a fact which may well help the FTSE 100 to post more record highs in the months to come."

Anglo-Australian miner Rio Tinto slipped despite saying it managed to hit its iron ore export targets after a solid showing in the final quarter where it shipped a record 90m tonnes, up from 85.8m tonnes in the previous three months.

Oil giant BP gushed lower after saying it expects to take a post-tax non-operating charge of around $1.7bn in the fourth quarter as part of the class action settlement of the disastrous Deepwater Horizon oil well spill in the US in 2010.

Troubled doorstep lender Provident Financial was a big faller after reporting on a mixed final quarter of the year, where there were 20% fewer new customer bookings for its Vanquis Bank arm and losses from the doorstep lending business were flagged as coming in at the worse end of expectations. However, analysts at Canaccord and Numis were largely positive, with the former noting that home credit receivables and active customers were ahead of its estimates of £300m and 0.4-0.5m respectively. .

Shares in Capita were hit after it lost out to a rival in its bid to retain the contract for administration of Prudential's life and pensions business. The Pru will transfer the contract from Capita to Tata Consultancy Services in July as part of a wider customer and technology transformation programme, which Capita said were expected to have contributed around £80m in revenue in the full year to December 2017.

Hospital group Spire Healthcare fell 2% after it stated that it expects 2017 revenues to be under 1% lower than previously guided. Spire also set a guidance range for underlying operating profits that includes prior guidance at the top end.

Homewares retailer Dunelm reversed earlier after saying comparable sales in the second quarter rose 3.4% thanks to a solid performance from the online segment. Investors were less pleased that margins were dented slightly and the first half will see profits fall.

Ashmore gave up its early gains and ended in the red, down 1.5%, despite the emerging markets asset manager posting a jump in assets under management for the three months to the end of December amid strong net inflows.

Likewise, the brakes were put on National Express after an initial rise, despite the coach operator saying it expects changes to the US tax system to cut its effective tax rate to the low 20s from the high 20s.

On the upside, high street baker Greggs advanced after saying full year total sales were up by a tasty 7.4% and company-managed shop like-for-like sales grew by 3.7%.

Retailer JD Sports surged after saying it expects pre-tax profit for the year to 3 February 2018 to be ahead of market expectations following a strong second half. Management highlighted the “material growth in online and continuing overseas space expansion”, with broker Shore Capital hailing UK online sales growth of circa 30%, with international online growing at a faster growth rate but from a much lower revenue base.

Estate agent Savills was in the black after saying it had a stronger-than-expected finish to 2017 and now sees underlying results for the year to the end of December ahead of its previous expectations.

Halma ticked up after saying it expects the recently enacted US tax cuts and to positively impact its future US after tax adjusted earnings and provide a £15m non-cash credit the year to March 2018.

RPC and Inchcape were hit by downgrades to 'hold' at Berenberg, but Primark owner Associated British Foods and Hunting were sharply higher after upgrades at Barclays and Morgan Stanley, respectively.

Market Movers

FTSE 100 (UKX) 7,755.93 -0.17%
FTSE 250 (MCX) 20,877.30 0.21%
techMARK (TASX) 3,546.72 0.17%

FTSE 100 - Risers

Johnson Matthey (JMAT) 3,297.00p 2.84%
NMC Health (NMC) 3,102.00p 2.31%
Associated British Foods (ABF) 2,891.00p 2.23%
Sainsbury (J) (SBRY) 256.20p 2.11%
Just Eat (JE.) 806.20p 2.05%
Ferguson (FERG) 5,702.00p 2.00%
Barclays (BARC) 199.40p 1.97%
Tesco (TSCO) 211.10p 1.88%
Land Securities Group (LAND) 996.70p 1.80%
Old Mutual (OML) 233.80p 1.70%

FTSE 100 - Fallers

Fresnillo (FRES) 1,378.50p -3.47%
Rio Tinto (RIO) 4,046.50p -3.02%
Antofagasta (ANTO) 1,009.50p -2.79%
BP (BP.) 518.30p -2.70%
BHP Billiton (BLT) 1,620.00p -2.41%
Randgold Resources Ltd. (RRS) 7,192.00p -2.20%
Coca-Cola HBC AG (CDI) (CCH) 2,336.00p -1.72%
ITV (ITV) 169.10p -1.66%
Anglo American (AAL) 1,755.20p -1.59%
AstraZeneca (AZN) 5,049.00p -1.58%

FTSE 250 - Risers

JD Sports Fashion (JD.) 389.90p 6.68%
UBM (UBM) 786.50p 5.22%
Hunting (HTG) 636.00p 4.18%
Savills (SVS) 1,003.00p 3.88%
TI Fluid Systems (TIFS) 254.20p 3.59%
Renishaw (RSW) 5,490.00p 3.27%
Mitie Group (MTO) 195.00p 3.12%
Dignity (DTY) 1,933.00p 2.82%
Capital & Counties Properties (CAPC) 309.40p 2.69%
CLS Holdings (CLI) 233.50p 2.64%

FTSE 250 - Fallers

Provident Financial (PFG) 804.00p -12.61%
Capita (CPI) 395.00p -6.18%
Hochschild Mining (HOC) 247.20p -4.78%
Dunelm Group (DNLM) 669.80p -4.42%
RPC Group (RPC) 798.60p -4.36%
Serco Group (SRP) 102.00p -3.23%
Vedanta Resources (VED) 924.20p -3.12%
Polymetal International (POLY) 895.80p -2.78%
Cairn Energy (CNE) 229.80p -2.71%
Coats Group (COA) 82.80p -2.59%