London open: Stocks gain ahead of UK and US inflation reports

London stocks gained on Tuesday ahead of the release of data which is expected to show an improvement in UK and US inflation.

At 0905 GMT the FTSE 100 climbed 1.50% to 5,962.54 points, bouncing back from Monday’s decline at the close as oil prices continued to slide on concerns about an oversupply and weak demand in the sector. Brent recovered 0.3% to $38.07 per barrel and West Texas Intermediate increased 0.2% to $36.40 per barrel at 0852 GMT. However, Moody's has cut its oil price estimates due to the threat of prolonged oversupply, hacking its 2016 Brent assumption to $43 from $53, with West Texas Intermediate lowered to $40 from $48.

“Today, at the very least, shouldn’t just let investors wallow in the commodity misery, with the UK’s latest inflation figures provided somewhat of a distraction away from Brent Crude’s tricky trading,” said Connor Campbell, financial analyst at Spreadex.

The UK inflation report at 0930 GMT is forecast to show the consumer price index rose 0.1% in November from a year ago, following a 0.1% increase a month earlier. Compared to a month ago, however, analysts see a 0.1% dip in November after a 0.1% increase a month earlier.

The Bank of England, which is targeting 2% inflation, last week voted 8-1 on keeping interest rates unchanged. While Britain’s economy has grown, inflation remains weak as the oil price slump provides a drag.

In the US, the CPI is forecast to climb 0.5% year-on-year in November after a 0.2% gain the prior month. On a month-on-month comparison, CPI is projected to come in at zero growth following a 0.2% increase in October.

The report comes ahead of the Federal Reserve’s interest rate decision on Wednesday. The Federal Open Market Committee is widely expected to raise rates by 25 basis points.

“At this stage, it is almost universally expected that, after a seven-year period at near-zero, the Fed will raise interest rates this Wednesday,” said Capital Economics. “Like everybody else, we anticipate a 25 basis point increase in the target range for the fed funds rate, taking it to between 0.25% and 0.50%.”

In company news, Sainsbury’s rallied after Kantar Worldpanel data showed the supermarket chain beat its rivals in the 12 weeks to 6 December by growing sales and market share. Tesco and Morrison Supermarkets were also sitting higher despite seeing sales fall during the period.

Aveva plunged after terminating takeover talks with US giant Schneider after the two were unable to reach an agreement.

Serco was on the back foot after doing a U-turn on the sale of its Environmental Services and Leisure businesses.

Rio Tinto jumped as its Oyu Tolgoi expansion project received a boost after a syndicate of banks and international governments agreed $4.4bn (£2.9bn) in loans. The copper and gold mine in Mongolia was held up by a dispute between the government and the company, with loan commitments expiring in 2014.

Petrofac advanced after a trading update showed the Engineering, Construction, Operations & Maintenance (ECOM) division has already logged orders of $8.8bn (£5.8bn) for the year.

Market Movers

FTSE 100 (UKX) 5,957.61 1.42%
FTSE 250 (MCX) 16,831.88 0.35%
techMARK (TASX) 3,093.36 0.04%

FTSE 100 - Risers

Old Mutual (OML) 165.70p 5.01%
Sainsbury (J) (SBRY) 246.80p 4.18%
Morrison (Wm) Supermarkets (MRW) 145.50p 3.78%
Glencore (GLEN) 83.00p 3.75%
Tesco (TSCO) 147.85p 3.36%
Royal Dutch Shell 'A' (RDSA) 1,464.00p 3.21%
BG Group (BG.) 947.90p 3.09%
Royal Dutch Shell 'B' (RDSB) 1,471.50p 3.05%
Aberdeen Asset Management (ADN) 288.60p 2.92%
Barclays (BARC) 214.40p 2.53%

FTSE 100 - Fallers

Randgold Resources Ltd. (RRS) 3,982.00p -1.48%
ARM Holdings (ARM) 1,030.00p -1.06%
Fresnillo (FRES) 658.50p -0.98%
Berkeley Group Holdings (The) (BKG) 3,509.00p -0.34%
Travis Perkins (TPK) 1,920.00p -0.31%
Hikma Pharmaceuticals (HIK) 2,046.00p -0.10%
Rolls-Royce Holdings (RR.) 538.00p 0.09%
Next (NXT) 7,335.00p 0.14%
Merlin Entertainments (MERL) 436.00p 0.16%
Marks & Spencer Group (MKS) 456.80p 0.24%

FTSE 250 - Risers

Tullow Oil (TLW) 161.60p 6.25%
Investec (INVP) 452.10p 4.60%
TalkTalk Telecom Group (TALK) 224.90p 3.88%
Redefine International (RDI) 50.25p 3.54%
SIG (SHI) 140.00p 3.32%
Premier Oil (PMO) 49.60p 3.23%
Allied Minds (ALM) 433.00p 3.10%
Circassia Pharmaceuticals (CIR) 283.40p 2.87%
Hunting (HTG) 293.00p 2.84%
BTG (BTG) 641.00p 2.81%

FTSE 250 - Fallers

Aveva Group (AVV) 1,378.00p -36.38%
Supergroup (SGP) 1,486.00p -8.21%
OneSavings Bank (OSB) 323.20p -6.54%
Howden Joinery Group (HWDN) 499.80p -3.42%
Paragon Group Of Companies (PAG) 347.50p -2.96%
Acacia Mining (ACA) 156.30p -2.56%
Domino's Pizza Group (DOM) 972.50p -2.41%
Halfords Group (HFD) 335.40p -2.27%
Nostrum Oil & Gas (NOG) 375.80p -1.08%
Cranswick (CWK) 1,822.00p -1.03%