London close: Stocks finish higher as UK construction PMI beats forecasts

London stocks finished higher on Tuesday after wavering throughout the session as construction data came in better than expected.

The Markit/CIPS construction purchasing managers’ index rose to 57.8 from 55.3 in November, beating expectations for a reading of 56. A level above 50 indicates an expansion while a reading below that signals a contraction.

Howard Archer, chief European and UK economist at IHS Global Insight, said: "This is a largely decent, reassuring survey that boosts hopes that construction output contributed to GDP growth in the fourth quarter of 2015 after being a drag in the third quarter."

The report marks a contrast to Monday’s unexpected dip in UK manufacturing PMI, which sent mining shares lower.

In the Eurozone, consumer prices rose 0.2% year-on-year compared with expectations for a 0.3% increase and unchanged from November, piling pressure on the European Central Bank to do more to bring inflation back to target.

Core CPI, meanwhile, was steady at 0.9% in December. “The soft inflation print increases the pressure on the ECB next week, and also increases the risk of additional easing,” said Pantheon Macroeconomics.

“But we think the central bank will refrain from adding stimulus, opting to wait for a bit more data in Q1 before potentially acting. Another disappointment in the January inflation data likely would see the central bank adding to its stimulus."

The ECB last month decided to cut the deposit facility rate by 10 basis points and extend its asset purchase programme until at least March 2017. Elsewhere in Europe, German unemployment fell 14,000 in December, beating forecasts for a 8,000 decrease.

The unemployment rate remained at 6.3% last month, as predicted by economists.

On the company front, oil stocks were under the cosh amid concerns about a supply glut. Brent and WTI prices slid 2.02% to $36.48 per barrel and 1.43% to $36.24 per barrel, respectively at 1654 GMT. Among the fallers were Tullow Oil and Nostrum Oil & Gas.

Mining stocks, on the other hand, reversed Monday’s declines after the upbeat construction PMI report. Anglo American, Glencore and Fresnillo were on the front foot.

Royal Mail jumped after Cantor Fitzgerald upgraded its rating on the stock to ‘buy', citing progress on cost savings and earnings in November that met expectations.

Tesco was also one the market’s stars of the day after Deutsche Bank upgraded the stock from ‘hold’ to ‘buy’ while cutting its target price from 210p to 200p ahead of Christmas trading figures due out later this month.

Royal Bank of Scotland rallied after RBC Capital Markets upgraded the lender’s stock to ‘outperform’ from ‘sector perform’ and lifted the target price to 375p from 350p.

Next slumped after reporting Christmas period sales that missed analysts’ expectations, reflecting “mainly” mild weather.

Bwin.party gained as it said its fourth quarter net revenue was up 5% on the previous year, driven primarily by sports betting and casino games through mobile channels.

Wizz Air flew higher after posting record passenger numbers in the 12 months to 31 December 2015.

Market Movers

FTSE 100 (UKX) 6,122.49 0.48%
FTSE 250 (MCX) 17,178.91 0.33%
techMARK (TASX) 3,209.86 0.60%

FTSE 100 - Risers

Glencore (GLEN) 87.83p 3.00%
Travis Perkins (TPK) 1,986.00p 2.58%
International Consolidated Airlines Group SA (CDI) (IAG) 611.00p 2.52%
TUI AG Reg Shs (DI) (TUI) 1,235.00p 2.32%
Bunzl (BNZL) 1,882.00p 2.23%
Rio Tinto (RIO) 1,939.50p 1.94%
Johnson Matthey (JMAT) 2,649.00p 1.88%
AstraZeneca (AZN) 4,562.00p 1.88%
Kingfisher (KGF) 327.70p 1.80%
DCC (DCC) 5,585.00p 1.73%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 242.10p -5.17%
Next (NXT) 6,860.00p -4.59%
Aberdeen Asset Management (ADN) 275.20p -2.41%
Burberry Group (BRBY) 1,116.00p -2.11%
Standard Chartered (STAN) 531.00p -1.98%
Berkeley Group Holdings (The) (BKG) 3,547.00p -1.77%
Direct Line Insurance Group (DLG) 386.30p -1.60%
Associated British Foods (ABF) 3,241.00p -1.07%
St James's Place (STJ) 968.50p -0.87%
London Stock Exchange Group (LSE) 2,628.00p -0.64%

FTSE 250 - Risers

Home Retail Group (HOME) 139.30p 41.13%
Evraz (EVR) 72.70p 6.05%
Euromoney Institutional Investor (ERM) 984.50p 4.57%
CLS Holdings (CLI) 1,785.00p 4.51%
Spire Healthcare Group (SPI) 314.90p 4.41%
Big Yellow Group (BYG) 847.00p 4.12%
IP Group (IPO) 207.60p 3.70%
UBM (UBM) 527.00p 2.83%
Workspace Group (WKP) 975.00p 2.47%
Centamin (DI) (CEY) 66.80p 2.45%

FTSE 250 - Fallers

Supergroup (SGP) 1,542.00p -6.26%
AO World (AO.) 145.30p -6.20%
BTG (BTG) 656.00p -4.93%
Cairn Energy (CNE) 153.30p -4.43%
OneSavings Bank (OSB) 328.30p -4.15%
Poundland Group (PLND) 196.00p -3.64%
Tullow Oil (TLW) 164.40p -3.35%
Zoopla Property Group (WI) (ZPLA) 236.20p -3.20%
Weir Group (WEIR) 927.50p -2.78%
Acacia Mining (ACA) 180.30p -2.59%