London midday: Stocks waver on UK construction PMI, Eurozone CPI

The FTSE on Tuesday wavered as investors weighed better-than-expected UK construction data against worse-than-forecast Eurozone inflation figures.

The Markit/CIPS construction purchasing managers’ index rose to 57.8 from 55.3 in November, beating expectations for a reading of 56. A level above 50 indicates an expansion while a reading below that signals a contraction.

Howard Archer, chief European and UK economist at IHS Global Insight, said: "This is a largely decent, reassuring survey that boosts hopes that construction output contributed to GDP growth in the fourth quarter of 2015 after being a drag in the third quarter."

The report marks a contrast to Monday’s unexpected dip in UK manufacturing PMI, which sent mining shares lower.

In the Eurozone, consumer prices rose 0.2% year-on-year compared with expectations for a 0.3% increase and unchanged from November, piling pressure on the European Central Bank to do more to bring inflation back to target.

Core CPI, meanwhile, was steady at 0.9% in December. “The soft inflation print increases the pressure on the ECB next week, and also increases the risk of additional easing,” said Pantheon Macroeconomics.

“But we think the central bank will refrain from adding stimulus, opting to wait for a bit more data in Q1 before potentially acting. Another disappointment in the January inflation data likely would see the central bank adding to its stimulus."

The ECB last month decided to cut the deposit facility rate by 10 basis points and extend its asset purchase programme until at least March 2017.

Elsewhere in Europe, German unemployment fell 14,000 in December, beating forecasts for a 8,000 decrease. The unemployment rate remained at 6.3% last month, as predicted by economists.

Stateside, Federal Reserve Bank of San Francisco President John Williams said on Monday he sees steady increases in interest rates this year if the US continues to experience steady economic growth, improvement in the labour market and a rise in inflation.

“I could easily see it be three or five or more or less depending" on what happens with the economy, he said, according to The Wall Street Journal.

On the company front, oil stocks were under the cosh amid concerns about a supply glut. Brent and WTI prices slid 0.40% to $37.06 per barrel and 0.13% to $36.71 per barrel, respectively at 1144 GMT. Among the fallers were BP, Tullow Oil and Nostrum Oil & Gas.

Mining stocks, on the other hand, reversed Monday’s declines after the upbeat construction PMI report. Anglo American, Glencore and Fresnillo were on the front foot.

Royal Mail jumped after Cantor Fitzgerald upgraded its rating on the stock to ‘buy', citing progress on cost savings and earnings in November that met expectations.

Royal Bank of Scotland rallied after RBC Capital Markets upgraded the lender’s stock to ‘outperform’ from ‘sector perform’ and lifted the target price to 375p from 350p.

Next slumped after reporting Christmas period sales that missed analysts’ expectations, reflecting “mainly” mild weather.

Bwin.party gained as it said its fourth quarter net revenue was up 5% on the previous year, driven primarily by sports betting and casino games through mobile channels.

Wizz Air flew higher after posting record passenger numbers in the 12 months to 31 December 2015.

Market Movers

FTSE 100 (UKX) 6,081.63 -0.19%
FTSE 250 (MCX) 17,119.66 -0.01%
techMARK (TASX) 3,187.81 -0.09%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 1,236.00p 2.40%
Tesco (TSCO) 144.95p 1.90%
Bunzl (BNZL) 1,874.00p 1.79%
Royal Mail (RMG) 444.10p 1.62%
Fresnillo (FRES) 720.50p 1.55%
Glencore (GLEN) 86.46p 1.40%
International Consolidated Airlines Group SA (CDI) (IAG) 603.50p 1.26%
Anglo American (AAL) 281.30p 1.24%
Travis Perkins (TPK) 1,960.00p 1.24%
Royal Bank of Scotland Group (RBS) 296.90p 1.16%

FTSE 100 - Fallers

Next (NXT) 6,800.00p -5.42%
Aberdeen Asset Management (ADN) 270.20p -4.18%
Standard Chartered (STAN) 529.10p -2.33%
Direct Line Insurance Group (DLG) 384.00p -2.19%
Burberry Group (BRBY) 1,118.00p -1.93%
Associated British Foods (ABF) 3,215.00p -1.86%
Berkeley Group Holdings (The) (BKG) 3,554.00p -1.58%
Old Mutual (OML) 164.80p -1.55%
Mondi (MNDI) 1,274.00p -1.55%
Sainsbury (J) (SBRY) 251.50p -1.49%

FTSE 250 - Risers

Home Retail Group (HOME) 112.60p 14.08%
Spire Healthcare Group (SPI) 312.90p 3.75%
CLS Holdings (CLI) 1,762.00p 3.16%
Vedanta Resources (VED) 280.70p 3.12%
Euromoney Institutional Investor (ERM) 970.00p 3.03%
Centamin (DI) (CEY) 67.05p 2.84%
Amec Foster Wheeler (AMFW) 436.60p 2.39%
Keller Group (KLR) 889.50p 2.12%
Evraz (EVR) 70.00p 2.12%
Go-Ahead Group (GOG) 2,645.00p 1.93%

FTSE 250 - Fallers

Nostrum Oil & Gas (NOG) 385.00p -5.06%
Supergroup (SGP) 1,565.00p -4.86%
Drax Group (DRX) 220.60p -4.67%
BTG (BTG) 658.50p -4.57%
AO World (AO.) 148.40p -4.20%
Cairn Energy (CNE) 154.60p -3.62%
Tullow Oil (TLW) 164.10p -3.53%
Poundland Group (PLND) 197.00p -3.15%
OneSavings Bank (OSB) 332.20p -3.01%
Enterprise Inns (ETI) 105.30p -2.86%