London open: Stocks flat as investors eye US inflation, BoE announcement

London stocks were steady in early trade on Tuesday as traders returned to their desks after the long weekend, with all eyes on the latest US inflation report and Bank of England rate announcement this week.

At 0840 BST, the 100 was flat at 7,771.03.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Investors are treading carefully ahead of the key US inflation report out tomorrow as economic data becomes king while markets assess what is next for interest rates.

"The Bank of England’s decision on Thursday is looming large, with another 0.25% hike expected, to squeeze more exuberance out of the economy and bring down still painful inflation."

Investors were mulling the latest data from Halifax, which showed that house prices fell in April after three consecutive months of growth.

On a month-on-month basis, prices were down 0.3% to £286,896 following a 0.8% increase in March. On an annual basis, prices were up just 0.1% in April, down from 1.6% growth a month earlier.

Kim Kinnaird, director of Halifax Mortgages, said house prices over recent months have largely mirrored the short-term volatility seen in borrowing costs.

"Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment," she said.

"However, cost-of-living concerns remain real for many households, which will likely continue weigh on sentiment and activity. Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over course of this year."

Market participants were also digesting the latest BRC-KPMG monthly retail sales monitor, which sowed that retail sales rose 5.1% in April, versus a 0.3% decline in the same month a year earlier. While shoppers spent more, the volume of items bought was lower due to inflation.

In equity markets, JD Sports rallied after saying it had agreed to buy French sportswear retailer Courir in a €520m deal.

Banks were also on the front foot, with Barclays, NatWest and Lloyds all higher, while travel stocks gained, with Carnival, Tui and easyJet all up.

On the downside, Marshalls tumbled as the landscaping materials group cut annual guidance after like-for-like sales fell 14% in the first four months of the year due to a reduction in new house building and continued weakness in private housing maintenance activity.

Direct Line slid as the insurer said average renewal premiums rose in the first quarter but warned that rising claims in its motor segment will put pressure on earnings this year. Admiral was also sharply lower.

Victrex lost ground after its first-half revenues missed expectations, while DCC fell as it said that chief executive Donal Murphy will step back from his day-to-day responsibilities for the next few weeks to address a medical condition.