London close: Stocks end higher as UK retail sales rise, oil prices jump

London stocks gained on Thursday as oil prices jumped and UK retail sales data beat expectations.

Oil prices rallied, with Brent crude rising past the $50 mark, on a weaker dollar and hopes of a deal on output at next month’s unofficial OPEC meeting.

Adding to the positive sentiment, data from the Energy Information Agency on Wednesday showed a bigger-than-expected fall in US weekly crude inventories.

At 1622 BST, Brent crude edged up 1.4% to $50.56 per barrel and West Texas Intermediate increased 2.3% to $47.90 per barrel.

UK retail sales rose 1.4% month-on-month in July after a 0.9% decline in June, beating forecasts for a 0.1% increase. The Office for National Statistics said the pick-up in retail sales was driven by better weather and discounts.

July sales were up 5.9% on the same month last year, up from the 4.3% gain in June and again beating the consensus estimate of a 4.2% rise.

Economist Sam Tombs at Pantheon Macroeconomics said consumers appeared to have been protected from the immediate fallout of the Brexit vote, noting that retailers had to continue to cut prices rapidly in order to get consumers to open their wallets, with the retail sales deflator falling 1.7% year-over-year.

But he warned that with firms intending to stop hiring and inflation set to soar, the high street "is set for a tough year" and expects the wider economy to slow in Q3 driven by sharp falls in business investment and de-stocking by firms.

The pound rose 0.87% against the dollar to $1.3155 at 1622 BST.

Meanwhile, investors continued to digest the minutes of the Federal Reserve’s July meeting which showed policymakers were divided over the timing of the next interest rate hike.

“Judging from the overall tone of the minutes it would appear the reality is that a strong US dollar, combined with weakening inflation gauges appears to be preventing the Fed from pulling the trigger,” said Michael Hewson, chief market analyst at CMC Markets.

“Putting that altogether and you have a perfect recipe for policy paralysis and indecision, which is a far cry from the beginning of this year when four rate hikes for 2016 appeared to be a view the Fed appeared keen to encourage.”

In other US news, the Labor Department said initial jobless claims dropped 4,000 in the week to 13 August to 262,000, compared to an unrevised 266,000 the previous week. Economists had pencilled in 265,000 claims.

The Federal Reserve Bank of Philadelphia’s manufacturing sector index increased from a reading of -2.9 in July to 2.0 in August. Consensus had forecast a print of 1.3.

On the company front, Admiral Group’s shares rose, bouncing back from heavy losses in the previous session when the insurer’s results sparked concerns about its Solvency II position.

Mining stocks were on the front foot as commodity prices advanced on the back of a weaker dollar and as investors adopted a risk-on approach, with Antofagasta, Glencore and BHP Billiton sharply higher.

Kaz Minerals advanced after it reported a rise in first half earnings and said its new Bozshakol project is on track for commercial output in the second half.

On the downside, ex-dividends were weighing on the FTSE, with Pearson, British American Tobacco, Imperial Brands, Legal & General and Reckitt Benckiser all in the red as they traded with no entitlement to their latest dividend payout.

Evraz shares slumped after the Russian steel miner reported a drop in half year revenue due to weaker steel prices.

Market Movers

FTSE 100 (UKX) 6,865.95 0.10%
FTSE 250 (MCX) 17,860.66 0.57%
techMARK (TASX) 3,507.60 0.11%

FTSE 100 - Risers

Antofagasta (ANTO) 571.00p 5.25%
Sainsbury (J) (SBRY) 241.60p 3.07%
easyJet (EZJ) 1,078.00p 2.96%
Taylor Wimpey (TW.) 157.30p 2.81%
BHP Billiton (BLT) 1,075.00p 2.77%
Morrison (Wm) Supermarkets (MRW) 192.40p 2.61%
London Stock Exchange Group (LSE) 2,867.00p 2.50%
Admiral Group (ADM) 2,132.00p 2.45%
Tesco (TSCO) 159.55p 2.11%
Travis Perkins (TPK) 1,556.00p 2.03%

FTSE 100 - Fallers

British American Tobacco (BATS) 4,834.00p -2.28%
Pearson (PSON) 863.00p -2.21%
Royal Bank of Scotland Group (RBS) 186.90p -1.79%
Imperial Brands (IMB) 4,065.00p -1.54%
Legal & General Group (LGEN) 208.60p -0.95%
Reckitt Benckiser Group (RB.) 7,418.00p -0.92%
Carnival (CCL) 3,613.00p -0.91%
BT Group (BT.A) 393.40p -0.61%
AstraZeneca (AZN) 5,046.00p -0.45%
Mondi (MNDI) 1,592.00p -0.44%

FTSE 250 - Risers

Kaz Minerals (KAZ) 180.00p 9.96%
Thomas Cook Group (TCG) 66.10p 7.48%
Clarkson (CKN) 2,297.00p 6.84%
Hochschild Mining (HOC) 308.80p 4.82%
Diploma (DPLM) 867.50p 4.77%
IMI (IMI) 1,095.00p 4.29%
Hays (HAS) 127.10p 4.01%
Brown (N.) Group (BWNG) 189.80p 3.77%
ICAP (IAP) 475.20p 3.55%
Polypipe Group (PLP) 277.30p 3.55%

FTSE 250 - Fallers

Evraz (EVR) 153.80p -11.05%
Laird (LRD) 297.90p -3.28%
Indivior (INDV) 319.80p -2.32%
JRP Group (JRP) 89.00p -2.20%
BGEO Group (BGEO) 2,680.00p -2.15%
William Hill (WMH) 302.60p -1.69%
Tritax Big Box Reit (BBOX) 141.40p -1.67%
Card Factory (CARD) 285.10p -1.52%
PZ Cussons (PZC) 341.60p -1.47%
Aldermore Group (ALD) 131.70p -1.42%