London open: Stocks rise after China steps out of deflation in September

Stocks in London started higher following the release of Chinese inflation data which analysts and economists termed encouraging and ahead of a spate of third quarter earnings reports from several of the largest US lenders due out later in the day.

As of 0823 BST the FTSE 100 was advancing 0.62% or 43.47 points to 7,020.37.

Overnight, the Shanghai Stock Exchange´s composite index edged higher by 0.08% to 3,063.81.

CMC Markets’ Michael Hewson said: “In an encouraging sign this morning’s Chinese CPI data does appear to show that inflation is gaining traction, with CPI coming in at 1.9%, above expectations. Factory gate prices still remain sluggish, though they have finally made it into positive territory at 0.1%, the first time that has happened since February 2012.

“Chinese PPI prices have been slowly improving for several months now so this return to positive territory is welcome news, especially so when prices were -5.9% at the beginning of this year.”

For their part, analysts at Danske Bank chipped in, "inflation data overnight points to further easing of deflationary pressures in China . In combination with concern over bubbling house prices and rising financial risks, it puts monetary policy firmly on hold.

"We expect monetary policy to be on hold for now but look for renewed easing in 2017 as growth tapers off again. The risk to our view is that China is increasingly using regional measures to control the housing market as there is a very large dispersion across the country." .

Reflective of the global headwinds facing Chinese exports, as data published in the previous session revealed, Singapore’s gross domestic product shrank at 4.1% quarter-on-quarter pace during the third quarter (Consensus: 0.0%).

On the economic calendar, UK construction output and the Bank of England credit conditions survey are at 0930 BST. In the US, PPI is at 1330 BST, while University of Michigan consumer sentiment and business inventories are at 1500 BST.

Citigroup, JP Morgan and Wells Fargo were all scheduled to release their latest quarterly results later in Friday´s session.

To take note of, Bank of England Governor Mark Carney and several other top Bank officials were scheduled to make appearances at a Future Forum in Birmingham on Friday.

In corporate news, Irish investment holding company DCC’s technology division is to buy Hammer Consolidated Holdings, a server and storage solutions reseller, for about £38m.

The acquisition by DCC Technology, which trades under Exertis, is expected to be completed by the end of the year and agreed to buy the issued share capital of Hammer based on an initial market value of £38.3m.

Specialist emerging markets asset manager Ashmore Group updated the markets on its assets under management on Friday, for the quarter to 30 September. The FTSE 250 firm said assets under management increased by $2bn during the period, driven solely by positive investment performance, with net flows flat for the three months.

It said the neutral net flow for the quarter resulted from small net inflows into the blended debt, local currency, corporate debt and overlay/liquidity themes, offset by equally small net outflows from equities, external debt, and multi-asset. “The continued improvement in net flows is encouraging in what is typically a quiet quarter,” said CEO Mark Coombs.

Provident Financial's performance during the third quarter was in line with management's own expectations, the company said in a statement. Credit quality at all three of its main units was described as "very sound", with the lender confident of its ability to deliver "good" full-year results.

The group´s funding and liquidity position remained strong and sufficient to fund maturities and projected growth in the business until May 2018.