London open: Stocks rise as inflation fears ease; US retail sales eyed

London stocks rose in early trade on Friday following a solid session on Wall Street, as worries about inflation eased.

At 0840 BST, the FTSE 100 was up 0.5% at 6,999.16, as investors eyed the release of US retail sales figures for April at 1330 BST.

CMC Markets analyst Michael Hewson said the data will give yet another insight into the US consumer’s mindset at a time when the US economy continues to reopen more broadly, and more people are starting to travel.

"It is notable that the US consumer has been much more resilient this year, helped in no small part by significant amounts of fiscal stimulus, while the recovery in the US jobs market has also helped," he said.

"In January we got another stimulus down payment in the form of a new $900bn stimulus plan that was agreed at the end of last year, thus prompting a big rebound in January retail sales of 5.3%, to a seven-month high, and while the February numbers saw a fall of 3%, the new stimulus payments that were signed off in March of $1.9trn, saw another big lift for March consumer spending, with the best performance since April last year, when the US came out of its first lockdown, rising 9.7%.

"Today’s April numbers aren’t likely to be anywhere near as robust, with a consensus of around 1.1%, which seems pretty much in line, given how well the US jobs market is going, however we could see an upside surprise given there is some evidence that not all the stimulus payments we saw in March have been spent yet."

In equity markets, business software group Sage rallied as it said it expects annual organic revenue growth to be near the top of its guidance after investment in its cloud operation prompted a decline in first-half profit.

Sanne surged after private equity firm Cinven said its approach to the fund administration services provider about a possible takeover at 830p a share had been rejected.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "The offer from Cinven represents a healthy 38% premium to the closing price last night, and might usually have been seen as pretty tempting.

"However, the shares were trading at that price on the market four years ago and the board clearly think the business is worth more. The market though is less sure. The shares are trading at 763p this morning, some way below the offer price and an indication that investors think there’s a strong chance Cinven will walk away from the deal without improving its offer."

On the downside, miners retreated as copper and iron ore prices fell back, with Rio Tinto, Antofagasta, BHP and Glencore among the worst performers on the FTSE 100.