London close: FTSE flat as miners slip and inflation surprises

London stocks failed to clinging on to positive territory by the close on Tuesday as mining heavyweights slipped on Chinese data and the pound had a mixed day after data showed UK inflation unexpectedly holding steady.

The FTSE 100 finished essentially flat at 7,414.42, losing a fraction of one point on the previous close, with the pound lost 0.6% against the euro at 1.1172 and gained 0.2% versus the dollar at 1.3143 as the latest Office for National Statistics figures showed the UK consumer prices index held steady at a five-year high last month.

The CPI remained at 3% year-on-year for a second month, short of the 3.1% the market had expected and the 3.2% forecast by the Bank of England's monetary policy committee this month.

As inflation did not exceed the current 2% target by more than one percentage point, BoE Governor Mark Carney avoided the task of having to write an explanatory letter to the Chancellor.

Core CPI, which excludes more volatile prices like petrol and food, also remained unmoved, at 2.7%, when it had been seen rising to 2.8%.

ONS said growth in input prices for UK manufacturers is slowing rapidly, in line with an unwinding of the sterling depreciation effect on import prices seen during 2016.

With CPI falling short of the BoE forecast as the central bank raised interest rates due to inflation rising above the level that policy makers would tolerate, analyst Craig Erlam at Oanda said, "the question of whether the BoE acted prematurely will likely be raised given the uncertain economic backdrop and significant headwinds facing the economy".

Erlam said, noting that while the pound slid, it still remains range-bound against the dollar, euro and yen, despite the political risk, dovish rate hike and the data.

Rather than UK data, it was a raft of weak Chinese data points that was the greatest influence on London's blue chip index, with fixed asset investment, industrial production and retail sales reports all came in below expectations and grew at a slower rate in the previous month.

This, said IG analyst Joshua Mahony, meant mining giants Anglo-American, Antofagasta, Glencore, Rio Tinto, and BHP Billiton were five of the biggest losers.

Broadcaster ITV joined them, reversing earlier gains, even though it reported an ongoing improvement in the television advertising crunch in the third quarter and looked forward to growth turning positive in coming months.

Land Securities also turned lower despite reporting a solid first half even in the face of Brexit headwinds.

Diversified engineer Smiths Group was in the red as it reported a drop in revenue for the first quarter mostly due to order timing.

Hikma Pharmaceuticals was broadly flat after announcing the acquisition of six products from Boehringer Ingelheim GmbH.

Marks & Spencer was hit by a cautious note from JPMorgan Cazenove, which warned of "significant pain" of achieving planned savings and so kept its rating at 'underweight', with a target price below the current share price.

Heading the risers, was Tesco after the Competition & Markets Authority decided to wave through its takeover of Booker, for which it sees more than £200m of synergies. Analysts at Shore Capital questioned the logic behind freely letting Britain's biggest supermarket buy Britain's biggest wholesaler and said the rest of the food industry would be feeling "dismay nay apoplexy". Booker shares were among the risers too.

Vodafone was not far behind after it lifted its full-year earnings growth guidance to around 10% from 4% to 8%.

Housebuilders were boosted by a well-received update from Bovis Homes, which said it’s on track to meet its expectations for the full year and to deliver “significant improvements” in profits for 2018 amid robust demand. Persimmon, Berkeley and Barratt, which reports on Wednesday, were all on the front foot.

Intermediate Capital Group topped the 250 leaderboard as it posted a 14% jump in first-half assets, while Computacenter was close behind after saying results for 2017 will now be “comfortably in excess” of its previous expectations.

Royal Mail was boosted by an upgrade to ‘outperform’ at Bernstein, while Polypipe rallied as it said revenue for the ten months ended 31 October was up 8.2% on the prior year.

BBA Aviation was higher after a well-received trading statement, while a mixed update from Meggitt had a similar reception along with news of its new CEO.

Retirement housebuilder McCarthy & Stone was also in the black after it posted a drop in full-year profit amid increased build and incentive costs, but a rise in revenue that beat analysts’ expectations.

Market Movers

FTSE 100 (UKX) 7,414.42 -0.01%
FTSE 250 (MCX) 19,846.60 0.30%
techMARK (TASX) 3,428.04 0.98%

FTSE 100 - Risers

Tesco (TSCO) 188.05p 6.24%
Vodafone Group (VOD) 227.05p 5.12%
Persimmon (PSN) 2,709.00p 1.96%
NMC Health (NMC) 2,853.00p 1.89%
Shire Plc (SHP) 3,565.00p 1.89%
Berkeley Group Holdings (The) (BKG) 3,662.00p 1.81%
Barratt Developments (BDEV) 628.50p 1.70%
Informa (INF) 740.50p 1.44%
St James's Place (STJ) 1,143.00p 1.33%
Admiral Group (ADM) 1,861.00p 1.20%

FTSE 100 - Fallers

Rio Tinto (RIO) 3,592.00p -2.89%
Anglo American (AAL) 1,455.00p -2.81%
Antofagasta (ANTO) 948.50p -2.67%
ITV (ITV) 150.10p -2.53%
Glencore (GLEN) 354.75p -2.53%
BHP Billiton (BLT) 1,387.50p -2.49%
Land Securities Group (LAND) 920.50p -2.13%
Smiths Group (SMIN) 1,483.00p -1.59%
Babcock International Group (BAB) 742.50p -1.39%
Marks & Spencer Group (MKS) 310.40p -1.18%

FTSE 250 - Risers

Intermediate Capital Group (ICP) 1,017.00p 9.41%
Computacenter (CCC) 1,069.00p 8.20%
Booker Group (BOK) 211.30p 6.39%
McCarthy & Stone (MCS) 156.30p 6.18%
Just Group (JUST) 153.30p 5.36%
BBA Aviation (BBA) 328.20p 3.93%
RPC Group (RPC) 933.00p 3.84%
UBM (UBM) 746.50p 3.82%
Vesuvius (VSVS) 589.50p 3.60%
Aveva Group (AVV) 2,587.00p 3.36%

FTSE 250 - Fallers

FirstGroup (FGP) 102.60p -6.64%
Tullow Oil (TLW) 181.60p -5.32%
Vedanta Resources (VED) 780.00p -3.94%
Dignity (DTY) 2,171.00p -3.64%
Electrocomponents (ECM) 662.00p -3.64%
Virgin Money Holdings (UK) (VM.) 277.60p -3.21%
Inmarsat (ISAT) 500.50p -3.00%
Euromoney Institutional Investor (ERM) 1,120.00p -2.95%
Kaz Minerals (KAZ) 774.00p -2.82%
B&M European Value Retail S.A. (DI) (BME) 381.30p -2.80%