London open: Banks and resource stocks pull FTSE lower early on

Yet more economic data from China came in below expectations on Tuesday, though hopes for further stimulus in Beijing were enough to support UK stocks early on.

London’s FTSE 100 was down 0.5% at 6,803 early on, with financial, mining and oil stocks providing a drag.

Figures out overnight showed that the annual rate of Chinese inflation fell dramatically to a five-year low of 0.8% in January from 1.5% the month before, missing consensus forecasts of a slowdown to 1%.

Analysts at Barclays said “there are a number of reasons to worry that deflation in China could reappear” and an easing of inflation “should induce the People’s Bank of China to ease monetary policy further”.

In other economic data, the British Retail Consortium said that UK retail sales grew at a 1.6% year-on-year rate in January but by just 0.2% in like-for-like terms, short of the estimate of 0.5%.

UK industrial production figures are due out on later Tuesday morning, along with economic growth estimates for January from the NIESR, while wholesale inventories and small business optimism data is due out later on in the States.

Banks and resource stocks fall

Banking peers Standard Chartered, HSBC and Barclays were among the worst performers early on in London. StanChart was hit with a downgrade by Deutsche Bank to ‘sell’, while HSBC continued to feel the heat from allegations it helped customers with tax avoidance in Switzerland.

Oil stocks such as Tullow Oil and Shell declined as the price of Brent crude fell 1.2% to $57.64 a barrel.

Mining stocks were also out of favour, pulling back after a strong performance on Monday with Randgold Resources and Anglo American both falling. Anglo declined after saying that profits at its part-owned South African iron ore division sank in 2014, while Randgold was weighed down by a ratings cut at Deutsche Bank to ‘hold’.

Royal Mail was also a heavy faller after JPMorgan Cazenove downgraded its stance on the postal delivery group to ‘neutral’ and cut its target price for the shares from 575p to 505p.

After an unscheduled announcement, shares in Mondi were up 2% as the paper and packaging group revealed that earnings for the full year would be at least 20% higher than the previous year. The company's unscheduled update reported that basic earnings per share would be between €0.96 and €0.99 in the calendar year, up between 20% and 24% on the €0.80 last year.

UK engineering group Babcock gained after saying it expects to hit forecasts for the full year after strong trading momentum continued into the third quarter, despite the collapse in oil prices causing “uncertainty” in some divisions.

Housebuilder Bellway rose after reporting that market conditions "remain favourable" as its saw an increased average of reservations per week in recent months.

Market Movers
techMARK 3,064.95 -0.18%
FTSE 100 6,803.36 -0.49%
FTSE 250 16,596.19 +0.10%

FTSE 100 - Risers
Mondi (MNDI) 1,238.00p +2.74%
Marks & Spencer Group (MKS) 486.50p +2.31%
Experian (EXPN) 1,202.00p +1.43%
Babcock International Group (BAB) 1,042.00p +1.36%
ITV (ITV) 228.70p +1.15%
Next (NXT) 7,155.00p +1.06%
CRH (CRH) 1,769.00p +0.74%
Direct Line Insurance Group (DLG) 315.30p +0.73%
RSA Insurance Group (RSA) 442.20p +0.73%
Travis Perkins (TPK) 1,953.00p +0.67%

FTSE 100 - Fallers
Royal Mail (RMG) 440.20p -3.15%
Weir Group (WEIR) 1,833.00p -2.45%
Standard Chartered (STAN) 920.10p -2.05%
Shire Plc (SHP) 4,652.00p -1.88%
HSBC Holdings (HSBA) 599.90p -1.75%
Centrica (CNA) 288.00p -1.74%
Barclays (BARC) 250.05p -1.42%
Royal Dutch Shell 'A' (RDSA) 2,159.00p -1.26%
BP (BP.) 451.35p -1.26%
Randgold Resources Ltd. (RRS) 5,350.00p -1.20%

FTSE 250 - Risers
Ocado Group (OCDO) 405.30p +3.92%
Micro Focus International (MCRO) 1,141.00p +3.54%
Man Group (EMG) 171.60p +2.14%
Ultra Electronics Holdings (ULE) 1,819.00p +1.96%
Polymetal International (POLY) 616.00p +1.73%
Hikma Pharmaceuticals (HIK) 2,372.00p +1.67%
Evraz (EVR) 183.90p +1.60%
Rightmove (RMV) 2,486.00p +1.30%
Stagecoach Group (SGC) 345.20p +1.26%
Alent (ALNT) 361.30p +1.23%

FTSE 250 - Fallers
Hunting (HTG) 525.50p -4.19%
Rank Group (RNK) 180.10p -2.65%
Premier Oil (PMO) 167.30p -2.28%
Vedanta Resources (VED) 452.10p -1.72%
ICAP (IAP) 456.00p -1.70%
Bank of Georgia Holdings (BGEO) 2,219.00p -1.68%
Petrofac Ltd. (PFC) 793.00p -1.49%
Wood Group (John) (WG.) 622.00p -1.35%
Cranswick (CWK) 1,332.00p -1.33%
Enterprise Inns (ETI) 107.80p -1.19%