London close: US markets help FTSE end higher following initial slump

Following an initial decline, London's blue chips had a decidedly better afternoon of trading, thanks in part to an upbeat performance amongst US equities.

Coming off an intra-day low of around 6,306, the FTSE 100 ended Tuesday's session 26.44 points higher at 6,392.68.

The morning's losses were due in part to UK inflation figures, which slumped to a five-year low of 1.2% in September from 1.5% in August. Economists had expected a reading of 1.4%.

Investec analyst Victoria Clarke said that "the case for a near-term rate hike is becoming muddier".

Over in the US, stocks rallied as better than expected earnings from the likes of Citigroup turned markets positive for the first time in four days.

IG market analyst, Chris Beauchamp, said: "Earnings from big US banks have been greeted with a sigh of relief, and are a welcome distraction from the troubles of the eurozone and other parts of the world.

"Even the abysmal ZEW reading from Germany has been shrugged off, with some investors reasoning that if things really are as bad in the Eurozone as the data suggests, then European Central Bank quantitative easing has just taken a step closer to becoming reality."

German economic sentiment fell more than expected in October, adding pressure on the European Central Bank to ramp up its efforts to address the weak recovery. The ZEW Center for European Economic Research index of investor and analyst expectations fell to -3.6 from 6.9 in September. Analysts had predicted a reading of 0.

Meanwhile, Eurozone industrial output dropped by 1.8% over the month of August, according to Eurostat, worse than the 1.6% decline expected by the market.

The Ebola crisis has continued to act as a negative backdrop, with the World Health Organisation saying that it anticipates seeing 5,000 to 10,000 Ebola cases per week in Guinea, Liberia and Sierra Leone by December.

So far, the organisation had received reports of 8,914 Ebola cases and 4,447 deaths from the virus.

Burberry declines after experiencing "more difficult external environment"

Burberry delivered double-digit underlying growth in the first half but shares in the high end fashion group slumped after the firm said that it has experienced a "more difficult external environment" with a softening in growth from Chinese consumers both home and when travelling.

Oil stocks were in decline, with Tullow Oil, BP, BG Group and Royal Dutch Shell all firmly in the red as they tracked oil prices lower.

On the upside, IAG flew higher thanks to an upgrade from HSBC, from 'neutral', while United Utilities was pushed higher by Morgan Stanley, which raised its target price from 865p to 875p.

On the second tier, the share price of Michael Page International dived after the recruitment firm delivered a profit warning, saying that its full-year bottom line would be "modestly lower than consensus market expectations". The company also said it was more cautious than it was previously on the short-term outlook for a number of international markets.

Also in the red was emerging markets asset manager Ashmore Group, which saw its assets under management (AuM) decrease by $3.7bn in the first quarter, driven mostly by poor investment performance. AuM was $71.3bn at 30 September as a result of negative investment performance of $3.4bn and net outflows of $0.3bn.

AO World led the upside, but made only a slight dent in the heavy losses seen in its share price since its flotation earlier this year. Since its initial public offering in February, the stock has tumbled more than 58%. Analyst Mike Stewart at Shore Capital today upgraded the stock to 'hold' on the belief that it is now trading at fair value.

Market Movers
techMARK 2,675.86 +0.78%
FTSE 100 6,392.68 +0.42%
FTSE 250 14,669.76 +0.86%

FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 339.60p +4.78%
Johnson Matthey (JMAT) 2,876.00p +4.39%
ARM Holdings (ARM) 853.00p +3.77%
Sports Direct International (SPD) 593.50p +3.22%
Weir Group (WEIR) 2,213.00p +2.69%
Carnival (CCL) 2,213.00p +2.69%
Anglo American (AAL) 1,423.00p +2.52%
IMI (IMI) 1,163.00p +2.47%
Rio Tinto (RIO) 3,163.50p +2.38%
Rolls-Royce Holdings (RR.) 957.50p +2.19%

FTSE 100 - Fallers
Burberry Group (BRBY) 1,425.00p -3.65%
Tullow Oil (TLW) 518.50p -2.08%
BG Group (BG.) 1,025.00p -1.44%
BP (BP.) 426.65p -1.23%
Standard Chartered (STAN) 1,086.00p -1.23%
Pearson (PSON) 1,137.00p -0.87%
Royal Dutch Shell 'A' (RDSA) 2,174.00p -0.84%
Royal Bank of Scotland Group (RBS) 357.80p -0.75%
Barclays (BARC) 222.00p -0.63%
Direct Line Insurance Group (DLG) 273.60p -0.58%

FTSE 250 - Risers
AO World (AO.) 166.30p +7.99%
Spirent Communications (SPT) 76.00p +5.56%
Bellway (BWY) 1,565.00p +5.53%
Centamin (DI) (CEY) 59.35p +5.04%
Brown (N.) Group (BWNG) 300.90p +4.99%
Computacenter (CCC) 615.50p +4.41%
Wetherspoon (J.D.) (JDW) 784.50p +4.39%
Moneysupermarket.com Group (MONY) 188.30p +4.15%
Kazakhmys (KAZ) 255.00p +4.04%
Northgate (NTG) 467.00p +3.78%

FTSE 250 - Fallers
Michael Page International (MPI) 383.90p -7.63%
Infinis Energy (INFI) 216.00p -4.42%
Balfour Beatty (BBY) 148.70p -3.25%
COLT Group SA (COLT) 119.00p -2.62%
Hellermanntyton Group (HTY) 283.00p -2.51%
Essentra (ESNT) 681.00p -2.44%
Cairn Energy (CNE) 160.90p -2.07%
Ashmore Group (ASHM) 295.30p -2.02%
Poundland Group (PLND) 306.00p -1.92%
DCC (DCC) 3,130.00p -1.91%