London midday: Stocks nudge lower as pound spikes on inflation data

Stocks in London nudged a touch lower, while the pound popped higher as data revealed that UK inflation overshot the Bank of England's 2% target in February for the first time in more than three years.

At midday, the FTSE 100 was down 0.1% to 7,422.89. Meanwhile, the pound was up 0.9% at $1.2465, hitting its highest level since late February.

The UK consumer price index jumped to 2.3% in February from 1.8% the month before, according to the Office for National Statistics, above the consensus estimate for a rise to 2.1% and crashing through the BoE's target.

On a monthly basis, CPI rose 0.7% in February, higher than the forecast rise of 0.5% and following a month-on-month dip in January.

The ONS also reported the new measure of CPIH, which includes housing, increased to 2.3% from 1.9%, beating the forecast for 2.2%.

Even core UK CPI, which excludes more volatile prices like energy and food, picked up to 2.0% from 1.6% the month before when economists had only expected a 1.8% increase.

IG's Joshua Mahony said: "The rise in core CPI to 2% is hugely significant given that this rules out the BoE’s ability to excuse away this inflation rise as being temporary or driven by oil prices.

"Carney’s indication that a rate rise is as likely as a cut highlights that the BoE are stuck between their desire to ease in the face of Brexit headwinds, and the need to tighten to keep inflation down."

Meanwhile, other data from the ONS showed the government borrowed the lowest amount in 10 years in February.

UK public sector net borrowing decreased by £2.8bn to £1.8bn, marking the lowest February borrowing since 2007 and below forecasts for £3.2bn.

Borrowing was down £19.9bn to £47.8bn in the current financial year-to-date, compared with the same period in the previous year. This was the lowest YTD borrowing since the financial year ending February 2008.

Public sector net debt excluding state-owned banks came in at 85.4% of gross domestic product, up £111.1bn or 2.3 percentage points as a ratio of GDP since February 2016.

In corporate news, Bellway shares rose after it hoisted its interim dividend 10% as the housebuilder enjoyed continued strong demand in the first half and maintained its targets for the full year.

Medical device maker Vectura Group gained ground as it reported growth in revenue last year on the back of recently launched products.

Online gaming entertainment and solutions provider 888 Holdings rallied after it posted a rise in revenue for the year ended 31 December as it lifted its dividend and announced a special dividend.

Enquest advanced after saying said the development of the Kraken field continued to be on track and is running under budget, and reiterating previous guidance for full-year 2017 production.

Drink mixers maker Fever-Tree fell despite reporting a big jump in full-year profit and revenue that met expectations. Neil Wilson at ETX Capital attributed the drop to profit-taking, saying investors might deem the company has "reached its zenith." He also highlighted the fact that momentum is coming from the UK market, adding that maintaining this will be exceptionally tough as this market may soften going forward into 2017 as there are signs of a slowdown in consumer discretionary spending.

Tullow Oil gushed higher after Deutsche Bank upped the stock to 'buy' from 'hold', while Bunzl jumped on the back of an upgrade to 'overweight' by Barclays and Hastings was boosted by an initiation at 'outperform' from Credit Suisse.

On the downside, Esure was hit by a downgrade to 'neutral' from Citigroup, while Berendsen slumped on a Barclays downgrade to 'underweight'.

Market Movers

FTSE 100 (UKX) 7,422.89 -0.09%
FTSE 250 (MCX) 19,127.16 -0.13%
techMARK (TASX) 3,483.02 -0.18%

FTSE 100 - Risers

Barclays (BARC) 232.35p 1.77%
Standard Life (SL.) 370.10p 1.76%
Royal Bank of Scotland Group (RBS) 242.70p 1.17%
Bunzl (BNZL) 2,358.00p 0.99%
Old Mutual (OML) 226.90p 0.89%
Marks & Spencer Group (MKS) 330.60p 0.82%
Anglo American (AAL) 1,289.50p 0.82%
Legal & General Group (LGEN) 252.70p 0.80%
Lloyds Banking Group (LLOY) 69.85p 0.79%
Tesco (TSCO) 190.45p 0.77%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,621.00p -1.43%
Rio Tinto (RIO) 3,429.50p -1.17%
BHP Billiton (BLT) 1,322.50p -1.05%
TUI AG Reg Shs (DI) (TUI) 1,128.00p -0.97%
Sage Group (SGE) 634.50p -0.94%
Intertek Group (ITRK) 3,881.00p -0.92%
3i Group (III) 728.00p -0.82%
AstraZeneca (AZN) 4,860.00p -0.82%
SSE (SSE) 1,495.00p -0.80%
Glencore (GLEN) 342.00p -0.78%

FTSE 250 - Risers

Vectura Group (VEC) 164.10p 4.26%
Hastings Group Holdings (HSTG) 260.20p 4.12%
Tullow Oil (TLW) 204.70p 3.65%
Hunting (HTG) 551.00p 3.09%
CLS Holdings (CLI) 1,740.00p 2.17%
Ted Baker (TED) 2,834.00p 2.05%
Bellway (BWY) 2,884.00p 1.98%
Cobham (COB) 132.60p 1.69%
Aberdeen Asset Management (ADN) 271.80p 1.68%
JRP Group (JRP) 140.00p 1.45%

FTSE 250 - Fallers

Berendsen (BRSN) 813.50p -5.19%
Ferrexpo (FXPO) 166.70p -4.36%
Allied Minds (ALM) 365.70p -3.76%
AO World (AO.) 142.80p -3.19%
Serco Group (SRP) 113.80p -1.98%
Ocado Group (OCDO) 253.60p -1.82%
Kaz Minerals (KAZ) 511.00p -1.73%
Evraz (EVR) 227.70p -1.64%
Domino's Pizza Group (DOM) 333.00p -1.57%
Brewin Dolphin Holdings (BRW) 306.90p -1.38%