London close: Stocks end lower after mixed inflation data

London stocks closed in the red on Tuesday after mixed UK and US inflation figures.

Data from the Office for National Statistics (ONS) showed the UK consumer price index (CPI) rose to 0.6% when compared to the same month last year, up from the 0.5% in June that economists expected to be maintained.

Rising petrol prices and upward moves in the prices of second hand cars, food, alcoholic beverages and hotel rooms were the main contributors to the rise in CPI.

However, core CPI, which excludes more volatile prices such as fuel and food, fell to 1.3% in July from the 1.4% year-on-year rise the month before. Economists had expected no change.

The pound rose 0.73% against the dollar to $1.2974 at 1609 BST.

“The Office for National Statistics has pointed out that although CPI inflation is now at its highest level since November 2014, it is still low in historic terms,” said IG market analyst Joshua Mahony.

“The figure was slightly more than economists had expected, but it doesn’t yet move the dial for the Bank of England’s monetary policy makers, who have arguably shifted their focus to growth and jobs in the wake of the referendum result.”

The Bank of England, which is targeting 2% inflation, expects consumer prices to increase as a weaker pound post Brexit makes imports more expensive.

In the US, CPI rose 0.8% year-on-year in July, down from 1.0% the previous month, according to the Labor Department. Economists had forecast a 0.9% increase. The easing in inflation was driven by a 1.6% drop in the energy index.

Core inflation, which excludes volatile energy and food prices, slowed to 2.2% year-on-year growth in July from 2.3% in June, surprising analysts who had expected no change.

The dollar was weaker against major currencies following the report, helping to push oil prices higher. Brent crude rose 0.22% to $48.46 per barrel and West Texas Intermediate increased 0.54% to $45.99 per barrel at 1612 BST.

“Today’s underwhelming price growth figures follow on the heels of some disappointing data out of the US which will have Janet Yellen and her colleagues at the Fed re-evaluating their interest rate policy," said Dennis de Jong, managing director at UFX.com.

However, New York Federal Reserve president William Dudley told Fox Business News an interest rate hike might be on the table at the September meeting.

Meanwhile, data from the Commerce Department showed US housing starts rose past forecasts in July, climbing 2.1% in July to 1.21m compared to estimates for a 0.8% decline to 1.18m.

Building permits, on the other hand, dipped by 0.1% to 1.152m in July, missing forecasts for a 0.6% gain to1.160m.

Another report, from the Federal Reserve, showed industrial output rose 0.7%month-on-month following a 0.4% gain in June, beating expectations of a 0.3% increase.

On the company front, shares in airlines easyJet and International Consolidated Airlines fell following a four-day rally in oil prices.

BHP Billiton rallied despite reporting a record loss in the year to the end of June and slashing its dividend as weaker commodity prices, write-downs and the dam disaster in Brazil took their toll.

Chilean copper mining colossus Antofagasta gained after it reported lower first-half revenue but said it had improved earnings and kept its dividend flat thanks to some heavy cost-cutting.

A gauge of other miners were also in the black, including Glencore, Rio Tinto and Anglo American.

Hochschild Mining advanced as it swung to a first half pre-tax profit of $60.3m against a loss of $43.4m loss the previous year.

BGEO Group, formerly Bank of Georgia Holdings, declined even as it reported a 20% increase in underlying first half profit in line with expectations.

Market Movers

FTSE 100 (UKX) 6,893.92 -0.68%
FTSE 250 (MCX) 17,852.56 -0.43%
techMARK (TASX) 3,515.49 -1.04%

FTSE 100 - Risers

Antofagasta (ANTO) 559.50p 8.85%
Rio Tinto (RIO) 2,486.50p 2.09%
Glencore (GLEN) 196.90p 2.02%
Anglo American (AAL) 890.00p 1.98%
CRH (CRH) 2,516.00p 1.37%
Barratt Developments (BDEV) 442.00p 1.19%
BHP Billiton (BLT) 1,051.00p 0.82%
London Stock Exchange Group (LSE) 2,891.00p 0.70%
Imperial Brands (IMB) 4,143.00p 0.66%
Taylor Wimpey (TW.) 153.80p 0.46%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 337.90p -3.12%
BAE Systems (BA.) 521.00p -2.34%
easyJet (EZJ) 1,063.00p -2.21%
International Consolidated Airlines Group SA (CDI) (IAG) 394.30p -2.11%
St James's Place (STJ) 959.00p -2.09%
National Grid (NG.) 1,081.00p -1.91%
Next (NXT) 5,385.00p -1.82%
Legal & General Group (LGEN) 211.70p -1.81%
Shire Plc (SHP) 5,065.00p -1.75%
Prudential (PRU) 1,419.00p -1.63%

FTSE 250 - Risers

Hochschild Mining (HOC) 316.90p 7.75%
Cairn Energy (CNE) 204.00p 4.62%
NMC Health (NMC) 1,330.00p 3.26%
CMC Markets (CMCX) 276.20p 3.25%
Amec Foster Wheeler (AMFW) 533.50p 3.09%
Euromoney Institutional Investor (ERM) 1,116.00p 2.95%
Vedanta Resources (VED) 546.50p 2.92%
Ashmore Group (ASHM) 367.70p 2.71%
Countrywide (CWD) 244.50p 2.43%
Tullow Oil (TLW) 234.00p 2.36%

FTSE 250 - Fallers

BGEO Group (BGEO) 2,807.00p -5.20%
Millennium & Copthorne Hotels (MLC) 422.50p -3.85%
JD Sports Fashion (JD.) 1,272.00p -3.71%
Spectris (SXS) 1,931.00p -3.45%
CLS Holdings (CLI) 1,355.00p -3.21%
OneSavings Bank (OSB) 225.10p -3.06%
Sophos Group (SOPH) 240.30p -3.03%
DFS Furniture (DFS) 252.40p -2.96%
Shawbrook Group (SHAW) 192.00p -2.93%
Ocado Group (OCDO) 280.40p -2.81%