London midday: FTSE rallies as UK inflation rises

The FTSE 100 was on the front foot on Tuesday as UK inflation in January reached its highest level in a year.

The UK consumer price index rose 0.3% last month compared to a year ago, as expected by analysts, up from December’s 0.2% increase, the Office for National Statistics revealed. The improvement came as the fall in oil prices eased, although inflation remains well below the Bank of England’s 2% target.

“If the recent oil price rally is sustained, we could see inflation continue to tick upwards in the coming months, though the Bank of England said earlier this month that inflation would likely undershoot the 2% target until 2018,” said Ben Brettell, senior economist at Hargreaves Lansdown.

In a lift to the oil sector, Saudi Arabia and Russia have agreed to freeze oil output in a meeting in Qatar. Saudi Arabian oil minister Ali al-Naimi met with his Russian counterpart Alexander Novak and representatives from Venezuela and Qatar in Doha on Tuesday where they agreed to halt oil production at January levels.

Brent crude rose 1.4% to $33.87 per barrel and West Texas Intermediate was flat at $29.72 per barrel at 1149 GMT, easing back from an a morning surge in prices.

Oil producers, including Royal Dutch Shell and BP, rallied on the news of the supply freeze agreement.

In China, data showed banks extended 2.51trn yuan of new loans in January, beating analysts’ estimates of 19.0trn yuan. The previous month banks granted 597.8bn yuan of new loans. The growth suggested Beijing is keeping monetary policy loose to turn around the economic slowdown.

Across the Atlantic, the pace is set to pick up as the US equities market returns to trading after closing on Monday for President’s Day.

Corporate-wise, Anglo American shares declined as the miner posted a pre-tax loss of $5.5bn after $3.8bn of write-downs since the half year, as it unveiled its promised "radical" overhaul of the business to counter crumbling commodity prices, with more than 6,500 job cuts expected.

Merlin Entertainments gained as it appointed Anne-Françoise Nesmes to its board as chief financial officer from 1 August.

Standard Chartered was under the cosh after Investec downgraded the stock to ‘hold’ from ‘buy’ in light of the very recent share price performance.

Fidessa Group dropped as it reported flat pre-tax profit for the full year amid volatile conditions in financial markets.

Mondi climbed as it said it expected 2015 underlying operating profits to be higher than the €767m achieved in the prior year.

Market Movers

FTSE 100 (UKX) 5,833.62 0.16%
FTSE 250 (MCX) 15,729.02 0.01%
techMARK (TASX) 3,001.01 0.28%

FTSE 100 - Risers

Merlin Entertainments (MERL) 411.70p 2.46%
International Consolidated Airlines Group SA (CDI) (IAG) 516.50p 2.38%
BP (BP.) 339.45p 2.00%
British American Tobacco (BATS) 3,838.00p 1.67%
Royal Dutch Shell 'B' (RDSB) 1,565.50p 1.62%
Royal Dutch Shell 'A' (RDSA) 1,565.50p 1.52%
Reckitt Benckiser Group (RB.) 6,468.00p 1.52%
Imperial Brands (IMB) 3,680.50p 1.32%
Inmarsat (ISAT) 980.50p 1.24%
Berkeley Group Holdings (The) (BKG) 3,199.00p 1.20%

FTSE 100 - Fallers

Standard Chartered (STAN) 418.55p -7.62%
Anglo American (AAL) 367.55p -6.49%
Aberdeen Asset Management (ADN) 221.10p -3.37%
Antofagasta (ANTO) 429.60p -2.98%
Barclays (BARC) 156.95p -2.36%
HSBC Holdings (HSBA) 438.15p -1.85%
BHP Billiton (BLT) 682.10p -1.66%
Shire Plc (SHP) 3,748.00p -1.29%
Glencore (GLEN) 99.99p -1.20%
Rio Tinto (RIO) 1,830.50p -1.11%

FTSE 250 - Risers

Spectris (SXS) 1,617.00p 6.73%
International Personal Finance (IPF) 241.60p 5.59%
Nostrum Oil & Gas (NOG) 281.40p 5.27%
BGEO Group (BGEO) 1,816.00p 5.21%
Just Retirement Group (JRG) 124.90p 3.65%
Interserve (IRV) 375.00p 3.48%
Telecom Plus (TEP) 857.00p 3.38%
Zoopla Property Group (WI) (ZPLA) 220.20p 2.13%
Diploma (DPLM) 653.50p 2.03%
Just Eat (JE.) 355.10p 1.92%

FTSE 250 - Fallers

Evraz (EVR) 67.15p -5.69%
Amec Foster Wheeler (AMFW) 357.00p -5.63%
Jimmy Choo (CHOO) 120.40p -3.60%
Vedanta Resources (VED) 231.40p -3.22%
Wood Group (John) (WG.) 568.00p -2.99%
Petrofac Ltd. (PFC) 716.00p -2.52%
Pennon Group (PNN) 809.00p -2.41%
St. Modwen Properties (SMP) 319.40p -2.26%
Enterprise Inns (ETI) 78.20p -2.25%
Mitchells & Butlers (MAB) 268.70p -2.11%