London close: Equities end higher as UK consumer confidence rises

London stocks finished Tuesday’s session higher after China hinted at further stimulus and a report showed an unexpected increase in UK consumer confidence this month.

China’s government said that monetary policy must be more “flexible” and more “forceful”, according to a statement released after the Central Economic Work Conference by Xinhua News Agency on Monday. The news comes as concerns mount over China's economic slowdown.

Closer to home, GfK’s UK consumer confidence index increased one point to +2 in December during the festive season, a touch higher than consensus forecasts for a reading of +1.

“Looking ahead, we continue to think that a snap-back in inflation, slowing job gains and rising interest rates will put consumers in a more morose mood next year,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

In Germany, GfK’s consumer confidence index rose to 9.4 in January from 9.3 the previous month, surprising analysts who had expected no change.

On another positive note for the markets, the oil sector regained ground with Brent crude up 0.38% to $36.49 per barrel and West Texas Intermediate up 1.37% to $36.31 per barrel at 1628 GMT.

Meanwhile, UK public sector borrowing rose £1.3bn to £14.2bn in November from the same month last year, according to data released by the Office for National Statistics. The figure was far higher than the £11.8bn economists had been expecting.

Across the Atlantic, the final estimate of third quarter US gross domestic product was revised to an annualised 2% from a previous estimate of 2.1%. Analysts had been expecting a revision to 1.9%.

"Altogether, the third estimate of third quarter GDP does little to change the picture of solid domestic activity offset by weakness abroad, as final sales to domestic purchasers (GDP less trade and inventories) rose 2.9% in the quarter," said Barclays Research analysts.

The core personal consumption expenditure index unexpectedly increased to 1.4% quarter-on-quarter in the third quarter from a prior estimate of 1.3%. PCE is a measure of GDP and the Federal Reserve's preferred measure of inflation. The US central bank is targeting 2% inflation.

Sales of existing US homes fell sharply in November, to their lowest pace in 19 months, according to data released by the country's National Association of Realtors. The NAR figures suggest existing home sales dropped 10.5% to an annual rate of 4.76m from a downwardly-revised 5.32m in October and compared with consensus estimates for an increase to 5.35m.

In company news, heavily-weighted miners were the biggest gainers, with Antofagasta and Anglo American firmly in the black as Chinese copper producers consider a possible production cut in January.

BG Group and Royal Dutch Shell were also on the front foot as oil prices recovered.

On the downside, retailer Marks & Spencer slid after Nomura cut its price target on the stock to 565p from 600p, although it retained its ‘buy’ rating.

ITV headed south after rising on Monday amid speculation that it could be a takeover target.

Centrica also slipped after RBC Capital Markets cut its target price on the British Gas owner to 260p from 280p, but reiterated its ‘outperform’ recommendation.

Market Movers

FTSE 100 (UKX) 6,077.92 0.71%
FTSE 250 (MCX) 17,163.22 0.51%
techMARK (TASX) 3,159.66 0.36%

FTSE 100 - Risers

Anglo American (AAL) 295.95p 5.51%
Antofagasta (ANTO) 443.80p 4.37%
Glencore (GLEN) 85.86p 3.38%
BG Group (BG.) 929.70p 3.32%
Royal Dutch Shell 'A' (RDSA) 1,486.00p 3.05%
Royal Dutch Shell 'B' (RDSB) 1,494.00p 3.00%
Berkeley Group Holdings (The) (BKG) 3,664.00p 2.95%
BP (BP.) 344.95p 2.91%
Fresnillo (FRES) 689.50p 2.68%
Standard Chartered (STAN) 560.10p 2.02%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 563.50p -1.05%
Marks & Spencer Group (MKS) 442.90p -1.05%
ITV (ITV) 268.70p -1.03%
Whitbread (WTB) 4,356.00p -0.86%
Reckitt Benckiser Group (RB.) 6,066.00p -0.66%
RSA Insurance Group (RSA) 426.00p -0.54%
Centrica (CNA) 209.10p -0.52%
Admiral Group (ADM) 1,627.00p -0.49%
Severn Trent (SVT) 2,127.00p -0.42%
Sainsbury (J) (SBRY) 258.60p -0.39%

FTSE 250 - Risers

Amec Foster Wheeler (AMFW) 426.70p 8.82%
Acacia Mining (ACA) 176.70p 5.68%
Evraz (EVR) 68.35p 5.64%
Lookers (LOOK) 176.40p 5.63%
Centamin (DI) (CEY) 65.55p 4.96%
Vedanta Resources (VED) 274.60p 4.41%
Drax Group (DRX) 239.60p 4.26%
Ophir Energy (OPHR) 90.15p 4.10%
Cairn Energy (CNE) 144.10p 4.04%
Cineworld Group (CINE) 568.50p 3.84%

FTSE 250 - Fallers

Card Factory (CARD) 365.10p -3.54%
DFS Furniture (DFS) 328.50p -2.78%
Halfords Group (HFD) 325.80p -2.51%
PayPoint (PAY) 927.00p -2.42%
AO World (AO.) 156.40p -2.25%
Entertainment One Limited (ETO) 165.50p -2.13%
esure Group (ESUR) 243.00p -2.10%
Wetherspoon (J.D.) (JDW) 733.00p -2.01%
Ocado Group (OCDO) 332.20p -1.89%
Supergroup (SGP) 1,683.00p -1.81%