London midday: Stocks gain as Tesco/Unilever's Marmite-gate resolved

London stocks gained as investors cheered news of Tesco and Unilever ending their price dispute and as China inflation data came in better than expected.

Tesco was a top riser on the FTSE 100 after Unilever said issues surrounding the supply of its leading brands including Marmite to the supermarket have been resolved.

The two companies were at loggerheads after Unilever said it wanted to raise its prices by about 10% to compensate for the plunge in the value of the pound.

“In terms of drama this morning has been relatively disappointing; though, to be fair, nothing could compare to the highs and lows of the Brexit’s epoch-defining moment – Marmite-gate,” said Connor Campbell, financial analyst at Spreadex. “The swift resolution of Tesco and Unilever’s price disagreement has seen the former jump to the top of the FTSE 100’s best performers list this Friday, the supermarket surging by more than 4%. Unilever, on the other hand, has shed another 0.7%, investors now focusing on the lacklustre third quarter report that got lost in the fray yesterday.”

Bank of England Governor Mark Carney on Friday said inflation will likely rise on products such as food due to the fall in the value of the pound amid Brexit worries. He said the sterling's fall "helps the economy adjust" but admitted it would be harder on consumers.

China inflation data gave equities a boost as it surprised to the upside. The consumer price index rose 1.9% year-on-year in September following a 1.3% increase in August. Economists had pencilled in a 1.6% gain.

Producer prices climbed 0.1% last month, beating forecasts for a 0.4% drop and following August’s 0.8% decline.

“If yesterday’s deterioration in Chinese exports pointed towards the potential for further easing from the PBoC, today’s surprise spike in both consumer and producer prices does the opposite, proving that the inflation picture is on the right track,” said IG’s Joshua Mahony.

Closer to home, UK construction output unexpectedly fell in August, according to the Office for National Statistics.

Construction output fell 1.5% on the month, following revised growth of 0.5% in July. Analysts had expected a 0.2% increase.

Still to come, Federal Reserve chair Janet Yellen speaks in Boston at 1700 BST, with investors hoping she’ll provide hints on whether the central bank will raise interest rates this year.

The US also sees the release of retail sales data at 1330 BST and the University of Michigan’s consumer confidence report at 1500 BST.

On the company front, Provident Financial slumped after reporting third quarter results in line with its expectations.

Ashmore shares climbed as it said quarterly assets under management increased by $2bn during the period, driven solely by positive investment performance, with net flows flat for the three months.

Man Group surged after the FTSE 250 hedge fund manager reported a jump in third-quarter funds under management and announced an agreement to acquire real asset manager Aalto Invest Holding AG.

Market Movers

FTSE 100 (UKX) 7,037.44 0.86%
FTSE 250 (MCX) 17,983.21 0.59%
techMARK (TASX) 3,540.34 0.25%

FTSE 100 - Risers

Tesco (TSCO) 203.75p 4.43%
Mediclinic International (MDC) 912.00p 2.99%
Burberry Group (BRBY) 1,543.00p 2.87%
Capita (CPI) 594.00p 2.77%
Standard Chartered (STAN) 657.90p 2.59%
Pearson (PSON) 834.50p 2.52%
Anglo American (AAL) 1,014.50p 2.41%
BHP Billiton (BLT) 1,212.50p 2.41%
International Consolidated Airlines Group SA (CDI) (IAG) 379.80p 2.23%
Rio Tinto (RIO) 2,633.50p 2.23%

FTSE 100 - Fallers

Fresnillo (FRES) 1,630.00p -2.16%
Provident Financial (PFG) 3,021.00p -1.88%
Randgold Resources Ltd. (RRS) 6,925.00p -1.49%
Antofagasta (ANTO) 533.00p -1.20%
Polymetal International (POLY) 854.50p -0.98%
Unilever (ULVR) 3,564.50p -0.89%
Persimmon (PSN) 1,711.00p -0.70%
Taylor Wimpey (TW.) 145.50p -0.48%
DCC (DCC) 6,985.00p -0.43%
GlaxoSmithKline (GSK) 1,695.00p -0.29%

FTSE 250 - Risers

Man Group (EMG) 123.00p 13.16%
Tullow Oil (TLW) 286.30p 7.87%
IP Group (IPO) 151.70p 4.62%
Vedanta Resources (VED) 642.50p 4.56%
William Hill (WMH) 309.50p 3.51%
OneSavings Bank (OSB) 278.80p 3.45%
Drax Group (DRX) 310.30p 3.30%
PayPoint (PAY) 1,091.00p 3.22%
Serco Group (SRP) 134.50p 3.14%
Paysafe Group (PAYS) 459.00p 2.91%

FTSE 250 - Fallers

Acacia Mining (ACA) 455.30p -2.36%
Domino's Pizza Group (DOM) 333.50p -2.23%
Centamin (DI) (CEY) 146.00p -2.21%
Assura (AGR) 58.50p -2.09%
Countrywide (CWD) 199.10p -1.53%
Big Yellow Group (BYG) 708.00p -1.39%
Moneysupermarket.com Group (MONY) 279.00p -1.24%
Crest Nicholson Holdings (CRST) 414.10p -1.12%
JD Sports Fashion (JD.) 1,570.00p -1.07%
Aggreko (AGK) 955.50p -0.98%