London close: Stocks shrug off another strong US inflation print

London equities on Thursday, underpinned by strength in the mining sector and an impressive showing from stocks with exposure to South Africa, as investors appeared to shrug off yet another higher than expected print on US inflation.

The FTSE 100 was up 0.29% or 20.84 points to 7,234.81, while the pound up 0.14% against the euro at 1.1261 and 0.29% firmer versus the dollar at 1.4057.

Following higher than expected US consumer price inflation a day earlier, IG analyst Joshua Mahony said markets were quickly settling back into their routine of steady gains as "the earthquake moment" prompted by the US CPI reading passes.

Indeed, on Thursday they shrugged off another higher-than-expected print on US prices, the Bureau of Labour Statistics reporting that so-called final demand producer prices rose at a 2.7% pace year-on-year in January (consensus: 2.5%).

"The FTSE has enjoyed another relatively stable session, as the gradual recovery continues to take shape. While last week saw US volatility spike off the back of higher inflation expectations, we are seeing that volatility calm down considerably this week. With US stocks higher despite yesterday's rise in US CPI and today's PPI increase, there is clearly a reduced sensitivity in markets, with the yesterday’s initial stock sell-off subsequently turning into gains.

"That disregard for rising inflation could provide us with a clue that the recent episode is nearing an end, with the weakness seen in the latter park of today’s session unlikely to damage the bullish story being built over recent days," Mahony said.

Old Mutual, Anglo American and Mondi, which have listings on the London Stock Exchange and the Johannesburg Securities Exchange, were up following Jacob Zuma's resignation as president of South Africa.

Analyst Neil Wilson at ETX Capital said investors were breathing a sigh of relief after nine years of scandal.

"Growth has stagnated badly under Zuma and there is hope that this will usher in a period of greater political stability and maybe some economic reforms that can get the drivers of growth going again.

"Ramaphosa is seen as good for business and will tackle corruption and mismanagement. Not that he won’t face challenges of course - there are deep economic and social problems and the ANC remains pretty divided. But whatever happens under the new president, I think markets and business assume it won’t be anything like as bad as Zuma."

Heavily-weighted miners put in a solid performance as commodity prices firmed on the back of a weaker dollar, with Rio Tinto, Glencore and BHP Billiton all up.

AstraZeneca was also firmer after it and Merck & Co announced that the US Food and Drug Administration has granted Orphan Drug Designation (ODD) for selumetinib, a MEK 1/2 inhibitor, for the treatment of neurofibromatosis type 1 (NF1).

GKN reversed earlier losses to trade higher after its chairman said the hostile bid from turnaround specialist Melrose Industries is "low price and high risk" and undervalues the group.

Medical equipment maker ConvaTec rallied as it reported better-than-forecast 2017 organic revenue growth of 2.3% to £1.76bn, while Bodycote surged after an upgrade to 'overweight' at JPMorgan.

On the downside, Standard Life Aberdeen was under the cosh as it said it was making an impairment charge of around £40m after Lloyds Bank announced it was withdrawing funds controlled by its Scottish Widows investment arm.

Elsewhere, RELX Group, the information and analytics formerly known as Reed Elsevier, was on the back foot despite lifting its final dividend 10%, pledging to repeat its £700m share buyback in 2018 and proposing to merge its UK and Dutch parent companies in a further simplification of its corporate structure. Analysts said it was likely being dumped along with other high dividend stocks.

Insurer Lancashire Holdings suffered heavy losses after saying it swung to a bigger-than-expected full-year loss as natural catastrophes took their toll, while Indivior was under pressure after it swung to a loss in the fourth quarter despite a rise in revenue.

AstraZeneca, Unilever, BP, Royal Dutch Shell and PZ Cussons were lower as their shares went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,234.81 0.29%
FTSE 250 (MCX) 19,574.76 0.65%
techMARK (TASX) 3,293.73 1.01%

FTSE 100 - Risers

Fresnillo (FRES) 1,391.00p 4.63%
BAE Systems (BA.) 591.80p 3.39%
Johnson Matthey (JMAT) 3,206.00p 3.29%
Old Mutual (OML) 246.70p 3.05%
Mondi (MNDI) 1,840.50p 2.74%
CRH (CRH) 2,489.00p 2.55%
Just Eat (JE.) 883.20p 2.53%
Rio Tinto (RIO) 4,125.50p 2.47%
Rolls-Royce Holdings (RR.) 840.20p 2.39%
Smiths Group (SMIN) 1,579.00p 2.23%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 358.41p -7.93%
AstraZeneca (AZN) 4,713.50p -2.41%
DCC (DCC) 6,680.00p -1.76%
Severn Trent (SVT) 1,702.00p -1.62%
United Utilities Group (UU.) 659.00p -1.52%
Royal Dutch Shell 'B' (RDSB) 2,285.00p -1.49%
Royal Dutch Shell 'A' (RDSA) 2,255.50p -1.14%
BP (BP.) 469.75p -1.08%
Centrica (CNA) 126.40p -0.78%
TUI AG Reg Shs (DI) (TUI) 1,525.00p -0.71%

FTSE 250 - Risers

Galliford Try (GFRD) 860.00p 7.50%
Convatec Group (CTEC) 212.20p 7.36%
Sophos Group (SOPH) 516.00p 4.58%
Bodycote (BOY) 927.50p 4.51%
Aggreko (AGK) 787.40p 3.82%
Hochschild Mining (HOC) 237.00p 3.81%
Cobham (COB) 123.40p 3.61%
SSP Group (SSPG) 633.50p 3.34%
Spectris (SXS) 2,623.00p 3.23%
Capital & Counties Properties (CAPC) 282.20p 3.14%

FTSE 250 - Fallers

Lancashire Holdings Limited (LRE) 595.50p -8.94%
Indivior (INDV) 375.30p -7.31%
IP Group (IPO) 110.40p -6.12%
Brown (N.) Group (BWNG) 193.00p -6.04%
TalkTalk Telecom Group (TALK) 101.60p -4.69%
Capita (CPI) 181.35p -4.30%
Provident Financial (PFG) 691.80p -3.14%
Barr (A.G.) (BAG) 624.00p -3.11%
Intermediate Capital Group (ICP) 1,005.00p -2.99%
RHI Magnesita N.V. (DI) (RHIM) 4,220.00p -2.31%