London midday: Stocks rise, Gilts wilt

Stocks were holding modestly higher even as yields on longer-dated Gilts continued to advance, in a repeat of the previous day's moves on financial markets, which saw the Dow Jones Industrials and S&P 500 establish fresh record highs and after the latest Chinese data released overnight showed the country had reverted to being an exporter of inflation globally.

As of 1230 GMT the Footsie was up by 0.09% or 6.13 points to 6,937.68 while the yield on the benchmark 10-year Gilt climbed six basis points to 1.44%.

Acting as a backdrop, in the previous session the European Central bank´s latest policy moves left economists a tad divided as to whether policymakers in the single currency bloc had in fact eased or tightened; in the end, equity traders appeared to opt for the former interpretation.

Investors in longer-term bonds, especially in the Eurozone's periphery however, were left nursing heavy losses.

Commenting on the day´s events, Jim Reid at Deutsche Bank had this to say: "So still lot of QE for 2017 but now they've tapered once and if inflation prospects edge up by the time we get to the second half we'll likely see a lot of speculation as to a more aggressive slow down in purchases. So a lot now rests on euro inflation in 2017 and we think yesterday's news gives plenty of ammunition for our increased [interest] rate volatility story from our 2017 outlook."

On a related note, the latest Chinese data published on Friday morning revealed that consumer prices in Asia´s largest economy rose at a 2.3% year-on-year pace in November, up from 2.1% in October (consensus: 2.2%).

Factory gate inflation accelerated even more quickly, with the country´s producer price index rising at a 3.3% clip year-on-year, a five-year high, up from 1.2% in the month before, with industrial commodity price increases the main culprit.

"Stepping back, the big picture is that China’s stimulus driven recovery has stoked domestic price pressure this year, with the most rapid increases concentrated in property prices and industrial commodity prices. The increases in the latter are helping to lift inflation globally," Julian Evans-Pritchard, China economist at Capital Economics explained.

However, it should be noted that the research boutique´s projections were calling for that reflation to "run out of steam" in 2017 as the Asian giant´s economy slowed again.

Evans-Pritchard's forecast called for producer prices to peak at about 5% in the first half of 2017 and to then edge lower afterwards.

Consumer price pressures might also moderate slightly at the same time, the economist said.

Adding fuel to the selling in longer-dated Gilts, the Bank of England's latest quarterly Inflation Attitudes Survey revealed that Britons' inflation expectations on a two-year horizon were at 2.5% - the highest since November 2014 - up from 2.2% in August.

Nonetheless, Dr. Howard Archer, chief European and UK economist at IHS Markit said: "November’s rise in inflation expectations is unlikely to unduly alarm the MPC and it remains a stone dead certainty that the Bank of England will keep interest rate unchanged next Thursday after its December policy meeting."

Achtung Bitte!: UK spreadbetters respond to BaFin plans

UK spreadbetters reacted to German market regulator BaFin´s announcement it was planning to clampdown on contracts-for-difference trading. Under the new proposals, CfD providers would need to ensure retail clients cannot lose more money than is deposited in their account. CMC Markets said this functionality was already available to its clients in Germany and on the basis of the consultation paper, there are no other requirements from BaFin including no leverage limits, and where retail clients' risk is limited to their deposits, there is no prohibition on marketing, distribution and sale of CfDs.

Textile services company Berendsen confirmed its UK Cleanroom business was being investigated by the Competition and Markets Authority (CMA). In a statement, the company said the probe related to a joint venture to which a Berendsen subsidiary was a party, including in relation to agreements entered into by the joint venture in May 2012.

International originator, active investor and manager of infrastructure projects, John Laing Group, posted a pre-close update for the year to 31 December on Friday.The FTSE 250 firm said primary Investment activity remained strong in each of its three geographical regions of Asia Pacific, North America and Europe - including the UK.Total investment commitments to date were £181m, in line with guidance for 2016, while total realisations agreed to date in 2016 were £255m.

Landscape products group Marshalls said on Friday that it is confident of meeting its expectations for 2016 as it reported a rise in revenue for the 11 months to 30 November. Revenue grew 3% to £375m, with sales in the domestic end market, which represent around 31% of group sales, up 10% compared with the prior year period. Marshalls said UK revenue since the half year is up 4% compared with 2015 and was particularly strong in the domestic end market, where sales in the five months to the end of November were 15% higher.

Electra Private Equity posted its preliminary results for the year to 30 September on Friday, with a net asset value per share of 5,149p, representing a total return of 35% for the year. The FTSE 250 firm’s share price was 4,310p, a total return of 36% for the year, compared with 17% for the FTSE All-Share Index. Its investment return was £751m, or 46% on the opening portfolio.

Market Movers

FTSE 100 (UKX) 6,949.14 0.25%
FTSE 250 (MCX) 17,746.83 0.37%
techMARK (TASX) 3,266.84 0.83%

FTSE 100 - Risers

Mediclinic International (MDC) 733.00p 4.05%
Sky (SKY) 819.00p 3.74%
Intertek Group (ITRK) 3,335.00p 2.55%
Fresnillo (FRES) 1,197.00p 2.48%
Shire Plc (SHP) 4,437.00p 2.46%
Smith & Nephew (SN.) 1,157.00p 2.39%
Rolls-Royce Holdings (RR.) 672.00p 2.05%
Associated British Foods (ABF) 2,717.00p 2.03%
Imperial Brands (IMB) 3,469.50p 1.89%
Informa (INF) 662.50p 1.84%

FTSE 100 - Fallers

Capita (CPI) 469.60p -3.24%
Prudential (PRU) 1,586.00p -2.55%
Barclays (BARC) 234.15p -2.03%
Travis Perkins (TPK) 1,411.00p -1.81%
Mondi (MNDI) 1,611.00p -1.47%
Lloyds Banking Group (LLOY) 61.97p -1.27%
Royal Mail (RMG) 456.40p -1.23%
Rio Tinto (RIO) 3,255.50p -1.17%
easyJet (EZJ) 996.50p -1.04%
Royal Bank of Scotland Group (RBS) 218.50p -0.82%

FTSE 250 - Risers

Restaurant Group (RTN) 351.20p 6.10%
Bodycote (BOY) 630.50p 4.65%
Derwent London (DLN) 2,697.00p 4.45%
Inmarsat (ISAT) 742.00p 4.14%
Ladbrokes Coral Group (LCL) 128.70p 4.13%
AO World (AO.) 181.60p 3.77%
St. Modwen Properties (SMP) 308.60p 2.90%
BGEO Group (BGEO) 3,411.00p 2.83%
Indivior (INDV) 301.90p 2.51%
TalkTalk Telecom Group (TALK) 162.20p 2.14%

FTSE 250 - Fallers

Marshalls (MSLH) 298.40p -5.87%
Euromoney Institutional Investor (ERM) 1,056.00p -5.71%
Evraz (EVR) 251.00p -4.24%
NCC Group (NCC) 203.50p -2.63%
Smurfit Kappa Group (SKG) 1,829.00p -2.56%
Berendsen (BRSN) 822.00p -2.14%
Sports Direct International (SPD) 282.90p -2.04%
Senior (SNR) 183.70p -2.03%
ICAP (IAP) 458.60p -2.01%
Wizz Air Holdings (WIZZ) 1,848.00p -1.70%