London open: Stocks gain as slowdown China GDP fuels stimulus hopes

UK stocks rallied as disappointing economic growth data in China fuelled hopes of further stimulus measures.

China’s gross domestic product rose 6.8% in the fourth quarter compared to the same period a year ago, weakening from the previous quarter’s 6.9%. Analysts had expected GDP to remain unchanged from the third quarter and the government is targeting 7% growth.

“On this occasion, I think the markets may have been relieved that the numbers were not as bad as they could have been, given the challenges facing the economy during this period of transition and slowing global growth,” said Craig Erlam, senior market analyst at Oanda.

“There is also the fact that there is still plenty of scope for fiscal and monetary stimulus to plug any gaps that appear in the coming years during this period of transition, which occurs at a time when the country is also trying to liberalise its markets, something that has faced many challenges already and will likely continue to do so this year.”

Separately data showed Chinese retail sales rose 11.1% year-on-year in December, missing expectations for an 11.3% increase.

Industrial production climbed 5.9% in December from a year ago, below estimates for a 6% gain.

Attention now turns to UK inflation figures due at 0930 GMT, with analysts expecting a 0.2% year-on-year increase, up from 0.1% in November. The month-on-month figures are projected to remain at zero growth.

The Bank of England last week decided to keep interest rates unchanged amid low inflation. The central is targeting 2% inflation and is expected to maintain interest rates at 0.5% until at least May.

BoE Governor Mark Carney speaks in London at 1200 GMT, potentially offering clues on when the central bank might raise rates.

In company news, AstraZeneca rallied after Barclays upgraded the stock to ‘equalweight’ from ‘underweight’ and lifted the target price to 5,000p from 4,400p following a review of the pipeline and the recent Acerta Pharma and ZS Pharma deals.

Rio Tinto jumped as it increased iron ore production in the fourth quarter of 2015 by 11% to 87m tonnes.

Unilever was a high riser as it said pre-tax full year profits fell 6% to €7.2bn, despite a 10% rise in turnover to €53.27bn.

British Land gained as it hailed a strong third quarter for retail and offices, with a dividend up 2.5%.

IG Group declined after posting a drop in first half profit despite a jump in revenue, as operating costs rose.

Market Movers

FTSE 100 (UKX) 5,861.25 1.41%
FTSE 250 (MCX) 16,095.18 0.85%
techMARK (TASX) 3,081.82 0.91%

FTSE 100 - Risers

Anglo American (AAL) 251.90p 8.27%
Glencore (GLEN) 80.77p 7.48%
Rio Tinto (RIO) 1,697.50p 3.98%
BHP Billiton (BLT) 632.60p 3.91%
Antofagasta (ANTO) 362.00p 3.43%
Old Mutual (OML) 156.70p 3.23%
Persimmon (PSN) 1,938.00p 2.87%
RSA Insurance Group (RSA) 410.30p 2.83%
Prudential (PRU) 1,379.00p 2.41%
Wolseley (WOS) 3,374.00p 2.40%

FTSE 100 - Fallers

BAE Systems (BA.) 502.50p -1.28%
Direct Line Insurance Group (DLG) 368.80p -0.08%
Smith & Nephew (SN.) 1,103.00p 0.00%
Tesco (TSCO) 161.75p 0.12%
Sainsbury (J) (SBRY) 240.40p 0.38%
Sky (SKY) 1,036.00p 0.39%
Imperial Tobacco Group (IMT) 3,582.00p 0.39%
SABMiller (SAB) 4,140.50p 0.42%
Worldpay Group (WI) (WPG) 303.20p 0.43%
SSE (SSE) 1,420.00p 0.50%

FTSE 250 - Risers

Ocado Group (OCDO) 271.30p 11.88%
Ophir Energy (OPHR) 85.75p 6.00%
Evraz (EVR) 62.05p 5.98%
Vedanta Resources (VED) 215.40p 4.66%
Just Eat (JE.) 440.10p 4.29%
DFS Furniture (DFS) 329.00p 3.95%
Man Group (EMG) 156.00p 3.59%
Aldermore Group (ALD) 194.70p 3.56%
Fidelity China Special Situations (FCSS) 124.70p 3.31%
Aggreko (AGK) 810.50p 2.86%

FTSE 250 - Fallers

Jardine Lloyd Thompson Group (JLT) 848.00p -3.09%
SIG (SHI) 130.00p -2.33%
Home Retail Group (HOME) 149.70p -2.22%
Tullett Prebon (TLPR) 316.50p -1.40%
IG Group Holdings (IGG) 734.00p -1.28%
Fidessa Group (FDSA) 1,825.00p -1.14%
Rank Group (RNK) 280.50p -1.13%
Savills (SVS) 791.00p -1.06%
Entertainment One Limited (ETO) 151.40p -1.05%
Jimmy Choo (CHOO) 128.90p -0.85%