London midday: Stocks fall on mixed UK labour report, China deflation fears

The FTSE fell on Wednesday as traders processed a mixed UK labour market report and a worse-than-forecast slowdown in China inflation.

The UK’s unemployment rate fell unexpectedly to 5.4% in the three months to August from the previous quarter’s 5.5% to reach its lowest level since mid-2008, the Office for National Statistics revealed.

The number of people in work climbed 140,000 to 31.1m in the last three months, in line with analysts’ forecasts, while unemployment declined 79,000 to 1.77m.

Including bonuses, pay growth rose 3% year-on-year in the quarter to August, marginally ahead of the previous month’s 2.9% gain but slightly short of analysts’ expectations for a 3.1% increase.

Claims for jobless benefits rose for a second consecutive month in September, climbing 4,600 from the 1,200 gain recorded in August and against analysts’ expectations for a 2,200 decline.

The claimant count rate, meanwhile, held steady at 2.3% last month as expected.

“The latest labour market data show overall improvement after a recent soft patch, although the rate of improvement remains below the levels seen at the start of this year,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“We believe that the Bank of England is still more likely than not to raise interest rates from 0.50% to 0.75% in the first half of 2016, but will probably wait until May. This is based on our belief that the UK will see some improvement in growth from its third quarter soft patch and that consumer price inflation will start rising gradually from late-2015.”

Earlier, data showed China’s consumer price index rose 1.6% in September from a year earlier, slowing down from a 2% increase in August, according to the National Bureau of Statistics. Analysts had been expecting a 1.8% increase. The decline was driven by a fall in food price inflation, particularly pork prices.

“Looking ahead, we expect the fall in consumer price inflation to be temporary,” said Julian Evans-Pritchard, China economist at Capital Economics. “A sharp fall in pig prices in recent months means that pork price inflation will remain elevated.”

In the US, retail sales figures will be released at 1330 BST and are expected to reveal a 0.2% increase in September, the same rate of growth as the previous month. The report is an important indicator of consumer spending which is a major contributor to gross domestic product.

On the company front, Hargreaves Lansdown was a top riser after reporting a 11% increase in revenue to £78.5m, on the back of a 24,000 increase in new clients in the quarter to 30 September.

Intertek Group rallied after agreeing to buy US-based construction material testing and assurance business Professional Service Industries.

Domino’s Pizza advanced after saying full-year results are likely to be ahead of its expectations, as it delivered a tasty performance in the third quarter and a solid start to the fourth quarter.

N Brown jumped as the company said it remains optimistic of a turnaround after reporting a half-year decrease in profits.

On the back foot, a batch of housebuilders including Taylor Wimpey, Johnson Matthey and Barratt Developments, reversed the previous day’s gains.

Market Movers

techMARK 3,005.51 -0.85%

FTSE 100 6,296.10 -0.73%

FTSE 250 16,835.42 -0.37%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 1,348.00p +5.07%

Intertek Group (ITRK) 2,572.00p +2.39%

Antofagasta (ANTO) 575.50p +1.59%

United Utilities Group (UU.) 975.50p +0.93%

Rio Tinto (RIO) 2,545.50p +0.91%

Admiral Group (ADM) 1,545.00p +0.72%

International Consolidated Airlines Group SA (CDI) (IAG) 579.50p +0.52%

Glencore (GLEN) 118.65p +0.51%

Fresnillo (FRES) 737.00p +0.41%

National Grid (NG.) 912.50p +0.39%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 188.10p -2.59%

CRH (CRH) 1,740.00p -2.36%

Johnson Matthey (JMAT) 2,470.00p -2.14%

Rolls-Royce Holdings (RR.) 696.00p -2.11%

Barratt Developments (BDEV) 621.00p -2.05%

Persimmon (PSN) 1,929.00p -1.98%

Associated British Foods (ABF) 3,253.00p -1.72%

BAE Systems (BA.) 452.50p -1.69%

Prudential (PRU) 1,472.00p -1.64%

Travis Perkins (TPK) 1,933.00p -1.63%

FTSE 250 - Risers

AL Noor Hospitals Group (ANH) 1,179.00p +18.55%

Domino's Pizza Group (DOM) 1,015.00p +14.04%

Brown (N.) Group (BWNG) 338.30p +7.06%

AO World (AO.) 160.50p +4.49%

Auto Trader Group (AUTO) 344.80p +3.82%

CLS Holdings (CLI) 1,800.00p +2.80%

Entertainment One Limited (ETO) 220.00p +2.71%

Homeserve (HSV) 419.40p +2.14%

Spire Healthcare Group (SPI) 377.60p +2.08%

Euromoney Institutional Investor (ERM) 993.50p +1.79%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 126.40p -5.53%

Worldwide Healthcare Trust (WWH) 1,620.00p -4.14%

Evraz (EVR) 86.60p -3.19%

Countrywide (CWD) 474.70p -3.02%

Renishaw (RSW) 1,933.00p -3.01%

Aggreko (AGK) 996.50p -2.97%

Tullow Oil (TLW) 233.90p -2.74%

Synergy Health (SYR) 2,283.00p -2.39%

Premier Oil (PMO) 86.00p -2.27%

Henderson Group (HGG) 258.20p -2.12%

FTSE TechMARK - Risers

Oxford Biomedica (OXB) 8.00p +5.26%

Consort Medical (CSRT) 935.00p +1.41%

E2V Technologies (E2V) 237.00p +1.17%

Dialight (DIA) 664.00p +0.84%

Triad Group (TRD) 31.75p +0.79%

Innovation Group (TIG) 39.75p +0.63%

RM (RM.) 161.00p +0.62%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 203.78 +0.20%

FTSE TechMARK - Fallers

Filtronic (FTC) 6.88p -3.51%

Oxford Instruments (OXIG) 664.50p -2.57%

Skyepharma (SKP) 334.50p -1.25%

NCC Group (NCC) 258.25p -0.86%

SDL (SDL) 381.00p -0.65%