London close: Sky falls, FTSE 100 rises

Stocks edged higher even as yields on longer-dated Gilts continued to advance after the latest Chinese data released overnight showed the country had reverted to being an exporter of inflation globally and investors eyed the mythical 20,000 point mark on the Dow Jones Industrials draw ever closer.

The UK's top flight index finished higher by 0.33% or 22.66 points up at 6,954.21 while the yield on the benchmark 10-year Gilt climbed seven basis points to 1.45%.

Acting as a backdrop, as of the closing bell in London the main Wall Street indices were continuing to push further into record territory in anticipation of a further reflationary boost in the form of increased government spending in the States.

That helped traders brush aside reports that the European Central Bank had chosen to allow matters to come to a head in Italy's struggling banking sector, denying Banca Monte dei Paschi di Siena an extension on its deadline to raise fresh capital.

Commenting on the day's events, Michael Hewson, chief market analyst at CMC Markets UK, said: "We’ve seen some profit taking in financials today ahead of the weekend as the ongoing political uncertainty continues in Italy.

"The decision by the European Central Bank to reject Italy’s demand for more time to secure private funding for a bailout of Monte dei Paschi is likely to keep markets apprehensive at the prospect of how any new Italian government might look in the context of dealing with the country’s banking sector, bringing closer the prospect of a possible politically toxic bail-in of retail bondholders."

Reflecting the ebullient mood among corporate captains on the other side of the Pond, roughly a half hour before the closing bell Sky revealed that it had received an approach from 21st Century Fox.

Earlier in the day, data out in China had shown that consumer prices in Asia´s largest economy rose at a 2.3% year-on-year pace in November, up from 2.1% in October (consensus: 2.2%).

Factory gate inflation accelerated even more quickly, with the country´s producer price index rising at a 3.3% clip year-on-year, a five-year high, up from 1.2% in the month before, with industrial commodity price increases the main culprit.

"Stepping back, the big picture is that China’s stimulus driven recovery has stoked domestic price pressure this year, with the most rapid increases concentrated in property prices and industrial commodity prices. The increases in the latter are helping to lift inflation globally," Julian Evans-Pritchard, China economist at Capital Economics explained.

However, it should be noted that the research boutique´s projections were calling for that reflation to "run out of steam" in 2017 as the Asian giant´s economy slowed again.

Evans-Pritchard's forecast called for producer prices to peak at about 5% in the first half of 2017 and to then edge lower afterwards.

Consumer price pressures might also moderate slightly at the same time, that same economist said.

Adding fuel to the selling in longer-dated Gilts, the Bank of England's latest quarterly Inflation Attitudes Survey revealed that Britons' inflation expectations on a two-year horizon were at 2.5% - the highest since November 2014 - up from 2.2% in August.

Nonetheless, Dr. Howard Archer, chief European and UK economist at IHS Markit said: "November’s rise in inflation expectations is unlikely to unduly alarm the MPC and it remains a stone dead certainty that the Bank of England will keep interest rate unchanged next Thursday after its December policy meeting."

Sky falls

Shares in Sky jumped as the company agreed to a take over by US media giant 21st Century Fox at a price of 1075p per share in cash, for a 36% premium on the shares' closing price as of 8 December.

Pharmaceutical giant AstraZeneca was in the green after the US Food and Drug Administration accepted the first biologics licence for it’s durvalumab in bladder cancer and given the drug priority review status. The company has also teamed up with American counterpart Eli Lilly to co-develop a treatment for Alzheimer’s disease (AD). Shire rose on the back of AstraZeneca’s gains.

UK spreadbetters reacted to German market regulator BaFin´s announcement it was planning to clampdown on contracts-for-difference trading. Under the new proposals, CfD providers would need to ensure retail clients cannot lose more money than is deposited in their account. CMC Markets said this functionality was already available to its clients in Germany and on the basis of the consultation paper, there are no other requirements from BaFin including no leverage limits, and where retail clients' risk is limited to their deposits, there is no prohibition on marketing, distribution and sale of CfDs.

Textile services company Berendsen confirmed its UK Cleanroom business was being investigated by the Competition and Markets Authority (CMA). In a statement, the company said the probe related to a joint venture to which a Berendsen subsidiary was a party, including in relation to agreements entered into by the joint venture in May 2012.

International originator, active investor and manager of infrastructure projects, John Laing Group, posted a pre-close update for the year to 31 December on Friday.The FTSE 250 firm said primary Investment activity remained strong in each of its three geographical regions of Asia Pacific, North America and Europe - including the UK.Total investment commitments to date were £181m, in line with guidance for 2016, while total realisations agreed to date in 2016 were £255m.

Landscape products group Marshalls said on Friday that it is confident of meeting its expectations for 2016 as it reported a rise in revenue for the 11 months to 30 November. Revenue grew 3% to £375m, with sales in the domestic end market, which represent around 31% of group sales, up 10% compared with the prior year period. Marshalls said UK revenue since the half year is up 4% compared with 2015 and was particularly strong in the domestic end market, where sales in the five months to the end of November were 15% higher.

Electra Private Equity posted its preliminary results for the year to 30 September on Friday, with a net asset value per share of 5,149p, representing a total return of 35% for the year. The FTSE 250 firm’s share price was 4,310p, a total return of 36% for the year, compared with 17% for the FTSE All-Share Index. Its investment return was £751m, or 46% on the opening portfolio.

Market Movers

FTSE 100 (UKX) 6,954.21 0.33%
FTSE 250 (MCX) 17,733.12 0.29%
techMARK (TASX) 3,269.95 0.92%

FTSE 100 - Risers

Sky (SKY) 1,000.00p 26.66%
ITV (ITV) 191.50p 5.51%
Mediclinic International (MDC) 737.00p 4.61%
AstraZeneca (AZN) 4,280.00p 3.98%
Smith & Nephew (SN.) 1,169.00p 3.45%
WPP (WPP) 1,771.00p 2.79%
Intertek Group (ITRK) 3,339.00p 2.68%
Worldpay Group (WPG) 265.80p 2.67%
Pearson (PSON) 801.00p 2.63%
Shire Plc (SHP) 4,432.50p 2.36%

FTSE 100 - Fallers

Provident Financial (PFG) 2,726.00p -3.64%
Anglo American (AAL) 1,214.00p -2.49%
Barclays (BARC) 233.10p -2.47%
Rio Tinto (RIO) 3,223.50p -2.14%
Prudential (PRU) 1,594.00p -2.06%
TUI AG Reg Shs (DI) (TUI) 1,077.00p -2.00%
Travis Perkins (TPK) 1,411.00p -1.81%
Lloyds Banking Group (LLOY) 61.74p -1.64%
International Consolidated Airlines Group SA (CDI) (IAG) 441.40p -1.58%
Mondi (MNDI) 1,611.00p -1.47%

FTSE 250 - Risers

AO World (AO.) 186.10p 6.34%
Ladbrokes Coral Group (LCL) 130.60p 5.66%
Derwent London (DLN) 2,695.00p 4.38%
Petrofac Ltd. (PFC) 870.00p 3.82%
Bodycote (BOY) 624.50p 3.65%
BTG (BTG) 575.50p 3.32%
TalkTalk Telecom Group (TALK) 163.30p 3.09%
Paysafe Group (PAYS) 378.00p 2.94%
Rank Group (RNK) 200.00p 2.83%
Inmarsat (ISAT) 731.00p 2.60%

FTSE 250 - Fallers

International Personal Finance (IPF) 160.60p -43.55%
Evraz (EVR) 234.60p -10.49%
Marshalls (MSLH) 296.90p -6.34%
Euromoney Institutional Investor (ERM) 1,050.00p -6.25%
CMC Markets (CMCX) 100.00p -5.03%
IG Group Holdings (IGG) 458.00p -4.53%
Ocado Group (OCDO) 252.10p -4.00%
Acacia Mining (ACA) 395.60p -3.28%
NCC Group (NCC) 202.90p -2.92%
SIG (SHI) 94.00p -2.73%