London close: FTSE closes higher after UK inflation

The FTSE closed in positive territory on Tuesday as official data showed UK inflation rose more than expected in March.

UK consumer prices last month grew 0.5% from a year earlier, beating analysts' estimates of 0.4%, as an early Easter lifted air fares and clothing prices rose, the Office for National Statistics revealed.

It marked an improvement on February's 0.3% gain and it was the fastest pace of growth since December 2014.

Core inflation, which excludes volatile food and energy prices, jumped 1.5% year-on-year in March, compared to forecasts of 1.3% and the previous month's 1.2% increase.

However, analysts noted that inflation remains well below the Bank of England's 2% target.

"Today’s increase is unlikely to spur the Bank of England into considering raising interest rates on Thursday with widespread consensus that this week will see the 85th consecutive month that the bank keeps interest rates on hold at their emergency level of 0.50%," said Maike Currie, investment director for personal investing at Fidelity International.

Separately, the ONS revealed UK house price growth surprisingly eased to a 7.6% annual rate of growth in February from a 7.9% rise the previous month. The average UK house price cost £284,000 in February.

Meanwhile, investors shrugged off the International Monetary Fund’s downgrades to global economic growth.

The IMF has cut its forecast for global growth in 2016 to 3.2% from the 3.4% it expected in January, with all advanced economies revised downwards. The UK's growth is expected to slow to 1.9% in 2016 from the 2.2% growth last year, before bouncing back to 2.2% in 2017.

However, it said China’s slowdown may not be as severe as first thought, revising its economic growth forecasts to 6.5% this year and 6.2% next year, both up two-tenths of a percentage point from the last outlook.

In commodities, oil prices edged higher ahead of a 17 April meeting between global producers to discuss whether to freeze output.

Brent crude jumped 2.3% to $43.86 per barrel and West Texas Intermediate increased 2.1% to $41.25 per barrel at 1622 BST.

On the corporate front, Anglo American surged after its diamond unit De Beers said it generated $660m from provisional rough diamond sales in the third sales cycle of 2016.

Fellow miners Glencore, BHP Billiton, Fresnillo and Rio Tinto were also in the black, benefiting from a jump in copper prices and the IMF’s improved forecasts on China.

Insurer Direct Line was bouncing back from losses incurred in the previous session when Barclays downgraded the stock to ‘equalweight’ from ‘overweight’.

Standard Chartered was higher for the second day in a row after the bank said it was looking to sell $4.4bn in Asian assets.

On the downside, equipment hire company Ashtead slumped after HSBC downgraded the stock to ‘hold’ from ‘buy’ following a reappraisal of its growth prospects.

Aviva racked up strong gains. Credit Suisse removed the stock from its Europe Focus List on Tuesday but said it expected the share price to close the gap versus its peers over the next few years.

Intu Properties was under pressure after Peel Hunt downgraded the stock to ‘reduce’ from ‘hold’, saying it expects it to underperform the sector going forward.

Market Movers

FTSE 100 (UKX) 6,240.53 0.65%
FTSE 250 (MCX) 16,779.52 0.00%
techMARK (TASX) 3,147.88 0.12%

FTSE 100 - Risers

Anglo American (AAL) 637.80p 9.01%
Glencore (GLEN) 148.95p 5.27%
Standard Chartered (STAN) 470.70p 5.08%
BHP Billiton (BLT) 808.60p 3.91%
Rio Tinto (RIO) 2,091.00p 2.98%
Fresnillo (FRES) 987.00p 2.71%
Direct Line Insurance Group (DLG) 363.80p 2.39%
3i Group (III) 459.70p 2.36%
Prudential (PRU) 1,343.50p 2.32%
Randgold Resources Ltd. (RRS) 6,860.00p 2.16%

FTSE 100 - Fallers

Ashtead Group (AHT) 816.50p -3.03%
Whitbread (WTB) 3,742.00p -2.35%
Persimmon (PSN) 1,957.00p -1.90%
Intu Properties (INTU) 311.40p -1.83%
Sainsbury (J) (SBRY) 285.60p -1.82%
Taylor Wimpey (TW.) 177.00p -1.56%
Next (NXT) 5,380.00p -1.56%
Paddy Power Betfair (PPB) 9,295.00p -1.33%
Marks & Spencer Group (MKS) 437.70p -1.29%
Barratt Developments (BDEV) 528.50p -1.03%

FTSE 250 - Risers

Evraz (EVR) 107.80p 8.29%
Ashmore Group (ASHM) 306.20p 5.84%
Vedanta Resources (VED) 377.10p 5.04%
Acacia Mining (ACA) 310.80p 4.75%
TalkTalk Telecom Group (TALK) 244.30p 3.65%
Rotork (ROR) 168.80p 3.49%
Amec Foster Wheeler (AMFW) 467.10p 3.34%
Kaz Minerals (KAZ) 162.30p 3.18%
Weir Group (WEIR) 1,079.00p 2.76%
McCarthy & Stone (MCS) 276.60p 2.71%

FTSE 250 - Fallers

Vesuvius (VSVS) 288.00p -5.67%
Cranswick (CWK) 2,402.00p -5.36%
AO World (AO.) 161.80p -4.88%
Indivior (INDV) 164.00p -4.65%
Countrywide (CWD) 362.30p -3.15%
Hastings Group Holdings (HSTG) 166.70p -3.03%
Capital & Counties Properties (CAPC) 330.00p -2.63%
Virgin Money Holdings (UK) (VM.) 351.10p -2.23%
Dairy Crest Group (DCG) 592.00p -2.07%
Northgate (NTG) 385.50p -1.98%