London open: Stocks fall after inflation data; airlines under the cosh

London stocks fell in early trade on Wednesday as investors mulled a slightly hotter-than-expected UK inflation print.

At 0850 BST, the FTSE 100 was down 0.4% at 7,644.28.

According to figures released earlier by the Office for National Statistics, consumer price inflation stuck at 6.7%, versus consensus expectations for it to ease to 6.6%.

Core CPI - which strips out energy, food, alcohol and tobacco - rose 6.1% in the 12 months to September. This was down from 6.2% a month earlier but a touch higher than expectations of 6.0%.

ONS chief economist Grant Fitzner said: "After last month's fall, annual inflation was unchanged in September.

"Food and non-alcoholic drinks prices eased again across a range of items with the cost of household appliances and air fares also falling this month.

"These were offset by rising prices for motor fuels and the cost of hotel stays."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Inflation is staying obstinately high in the UK, adding fuel to fears that interest rates will have to stay in an elevated position - a pattern of worry that’s just reared up again in the United States. An unwelcome combination of worries about a worsening situation in the Middle East and concerns about high interest rates settling in, is unsettling investors.

"Prices had been cooling in the UK but instead of heading a small notch downwards as largely expected, the CPI headline rate of inflation came to an abrupt halt in September, as the impact of higher fuel prices fed through. Oil prices have surged again amid worsening violence in Israel and Gaza, with Brent Crude the benchmark heading above $91, adding to worries that inflation will stay stubborn. The door has still been kept ajar to another rate hike in the UK, but at the very least still untamed inflation is pushing any chance of a rate cut further back into next year."

Investors were also digesting the latest data releases out of China, which showed that the economy grew faster than expected in the third quarter. GDP rose by 4.9% year-on-year in Q3, after rising 6.3% in the second quarter, coming in above consensus expectations for 4.5% growth.

Meanwhile, industrial production grew 4.5% year-on-year in September, unchanged from August and versus consensus expectations of 4.4% growth.

Retail sales were up 5.5% following 4.6% growth in August and versus expectations of 4.9%.

In equity markets, housebuilder Barratt Developments was in the red as it said it remains on track to hit targeted home completions despite a much slower start to the financial year as a result of ongoing challenges prospective buyers are finding in securing mortgages.

Chief executive David Thomas said the trading environment since 1 July "remains difficult", as the company reported falls in private reservations and forward sales.

The declines reflected the impact of higher borrowing costs and the absence of the Help to Buy scheme, which accounted for 12% of private preservations in the first quarter of last year.

Berkeley Group and Bellway also fell.

Airlines flew lower, with BA and Iberia owner IAG, Wizz Air and easyJet all down after United Airlines said it was forecasting weaker earnings for the fourth quarter due to higher costs. Wizz was also hit by a rating downgrade at Citi.

William Hill and Mr Green owner 888 slumped after it posted a 10% decline in third-quarter revenues as it took a hit from new gambling regulations.

On the upside, Whitbread rallied after the Premier Inn owner reported a 44% jump in interim adjusted pre-tax profit, hiked its dividend and announced a £300m share buyback.

Marshalls was also sharply higher as it backed its full-year expectations despite reporting a dip in revenue for the nine months to the end of September.

Market Movers

FTSE 100 (UKX) 7,644.28 -0.40%
FTSE 250 (MCX) 17,556.81 -0.75%
techMARK (TASX) 4,155.73 -0.47%

FTSE 100 - Risers

Whitbread (WTB) 3,439.00p 3.49%
JD Sports Fashion (JD.) 138.35p 1.17%
Marks & Spencer Group (MKS) 224.30p 0.95%
Beazley (BEZ) 535.00p 0.47%
Pearson (PSON) 923.60p 0.43%
Hargreaves Lansdown (HL.) 747.20p 0.43%
Endeavour Mining (EDV) 1,685.00p 0.42%
B&M European Value Retail S.A. (DI) (BME) 583.00p 0.38%
Admiral Group (ADM) 2,442.00p 0.33%
Next (NXT) 7,204.00p 0.31%

FTSE 100 - Fallers

Barratt Developments (BDEV) 414.20p -2.29%
Taylor Wimpey (TW.) 109.65p -1.88%
Spirax-Sarco Engineering (SPX) 8,254.00p -1.71%
Croda International (CRDA) 4,231.00p -1.67%
Berkeley Group Holdings (The) (BKG) 4,032.00p -1.63%
Smith & Nephew (SN.) 933.60p -1.60%
St James's Place (STJ) 658.40p -1.53%
Scottish Mortgage Inv Trust (SMT) 668.00p -1.45%
WPP (WPP) 714.60p -1.43%
Lloyds Banking Group (LLOY) 43.18p -1.40%

FTSE 250 - Risers

Marshalls (MSLH) 213.00p 7.58%
CAB Payments Holdings (CABP) 223.25p 2.88%
Jupiter Fund Management (JUP) 80.20p 1.84%
Herald Investment Trust (HRI) 1,670.00p 1.33%
NextEnergy Solar Fund Limited Red (NESF) 78.15p 0.71%
Bakkavor Group (BAKK) 93.00p 0.65%
Ithaca Energy (ITH) 173.20p 0.58%
Chemring Group (CHG) 275.50p 0.55%
Pantheon International (PIN) 301.50p 0.50%
Hiscox Limited (DI) (HSX) 973.00p 0.46%

FTSE 250 - Fallers

IP Group (IPO) 47.35p -4.73%
Wizz Air Holdings (WIZZ) 1,624.00p -4.25%
Bellway (BWY) 2,154.00p -3.58%
Baltic Classifieds Group (BCG) 194.00p -2.71%
888 Holdings (DI) (888) 83.55p -2.57%
Octopus Renewables Infrastructure Trust (ORIT) 83.20p -2.46%
Persimmon (PSN) 1,043.50p -2.43%
Clarkson (CKN) 2,615.00p -2.43%
Bellevue Healthcare Trust (Red) (BBH) 129.80p -2.41%
Mobico Group (MCG) 60.90p -2.25%