London pre-open: Stocks seen up as investors mull UK CPI

London stocks were set to rise at the open on Wednesday following a positive session on Wall Street, as investors mulled the latest UK inflation reading.

The FTSE 100 was called to open around 23 points higher.

Data released earlier by the Office for National Statistics showed that consumer price inflation rose in July for the first time since last December, albeit less than expected.

CPI rose by 2.2%, up from 2% in June but coming in below expectations of 2.3%. It is now back above the Bank of England’s 2% target.

The ONS said the largest upward contribution came from housing and household services where prices of gas and electricity fell by less than they did last year. The largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.

The figures also showed that the CPI services annual rate fell to 5.2% in July from 5.7% a month earlier.

Ruth Gregory, deputy chief UK economist at Capital Economics, said the smaller-than-expected rise in CPI inflation and the sharp fall in services inflation to a two-year low "will reassure the Bank of England that the disinflation process is on track and opens the door to more interest rate cuts later this year".

In corporate news, infrastructure company Balfour Beatty lifted its dividend by 9% and said it expected annual earnings to grow after a jump in half-year profit.

The company said pre-tax profit for the six months to June rose to £112m from £82m a year earlier. It lifted the dividend to 3.8p a share from 3.5p.

"The outlook for the group's chosen growth markets, where we hold unique capabilities in delivering complex infrastructure projects, remains encouraging, including in the UK with the new government reinforcing commitments to critical national infrastructure,” said chief executive Leo Quinn.

Hammerson and PIMCO Prime Real Estate have secured a €350m non-recourse term loan, with Hammerson's share being €175m, to refinance the Dundrum Town Centre's existing €570m facility maturing in September.

The FTSE 250 company said the new loan, repayable by September 2031 with an expected interest rate of 5.5%, would not change its reported loan-to-value ratio, while extending the average maturity from 2.2 to 2.9 years. It said Dundrum Town Centre in southern Dublin is 95% occupied and generates €62m in annual rent.