London close: Stocks drop as market weighs US retail sales, China inflation, UK jobs

US retail sales rose 0.1% month-on-month with a flat reading in the previous month and with analysts’ expectations for 0.2% increase, the Commerce Department revealed.

Auto sales were again among the best performers, rising 1.7% from the previous month, while gas sales declined as expected 3.2%.

“For all the talk of a US interest rate hike, there is still no stand-out data to compel Fed chair Janet Yellen into action,” said Dennis de Jong, managing director at UFX.com .

Chinese inflation slows

China’s consumer price index rose 1.6% in September from a year earlier, slowing down from a 2% increase in August, the National Bureau of Statistic said,. Analysts had been expecting a 1.8% increase, adding to concerns about the health of the world’s second largest economy. The decline was driven by a fall in food price inflation, particularly pork prices.

“Unfortunately the usual knee-jerk hopes of more China stimulus to help engineer that helpful 'bend' and boost economic growth are failing to appease,” said Mike Van Dulken, head of research at Accendo Markets. “The inflation figures just add insult to injury after poor trade data yesterday (imports plunging, exports still falling) and come ahead of what is highly likely to prove a displeasing Q3 GDP print on Monday.”

UK labour market report

The UK’s unemployment rate fell unexpectedly to 5.4% in the three months to August from the previous quarter’s 5.5% to reach its lowest level since mid-2008, the Office for National Statistics revealed.

The number of people in work climbed 140,000 to 31.1m in the last three months, in line with analysts’ forecasts, while unemployment declined 79,000 to 1.77m.

Including bonuses, wages rose 3% year-on-year in the quarter to August, marginally ahead of the previous month’s 2.9% gain but slightly short of analysts’ expectations for a 3.1% increase.

Claims for jobless benefits rose for a second consecutive month in September, climbing 4,600 from the 1,200 gain recorded in August and against analysts’ expectations for a 2,200 decline.

The claimant count rate, meanwhile, held steady at 2.3% last month as expected.

“The latest labour market data shows overall improvement after a recent soft patch, although the rate of improvement remains below the levels seen at the start of this year,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“We believe that the Bank of England is still more likely than not to raise interest rates from 0.50% to 0.75% in the first half of 2016, but will probably wait until May. This is based on our belief that the UK will see some improvement in growth from its third quarter soft patch and that consumer price inflation will start rising gradually from late-2015.”

Companies

Hargreaves Lansdown was a top riser after reporting a 11% increase in revenue to £78.5m, on the back of a 24,000 increase in new clients in the quarter to 30 September.

Intertek Group rallied after agreeing to buy US-based construction material testing and assurance business Professional Service Industries.

Precious metals miner Fresnillo was up after saying it was on course to hit its full-year guidance, with third-quarter silver production dwindling to 11.04m oz but almost flat on the previous year and slightly lower than the preceding quarter.

Domino’s Pizza advanced after saying full-year results are likely to be ahead of its expectations, as it delivered a tasty performance in the third quarter and a solid start to the fourth quarter.

N Brown jumped as the company said it remains optimistic of a turnaround after reporting a half-year decrease in profits.

On the back foot, a batch of housebuilders including Taylor Wimpey, Johnson Matthey and Barratt Developments, reversed the previous day’s gains on the back of well-received full-year numbers from FTSE 250 peer Bellway.

Shares in luxury fashion retailer Burberry declined for the second day in a row ahead of its second-quarter update on Thursday and as worries gathered pace about growth in China, to which it is heavily exposed.

Market Movers

FTSE 100 (UKX) 6,278.01 -1.01%
FTSE 250 (MCX) 16,834.47 -0.38%
techMARK (TASX) 2,988.68 -1.40%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 1,331.00p 3.74%
Intertek Group (ITRK) 2,584.00p 2.87%
Antofagasta (ANTO) 580.00p 2.38%
Fresnillo (FRES) 750.50p 2.25%
Glencore (GLEN) 120.25p 1.86%

FTSE 100 - Fallers

Barratt Developments (BDEV) 611.00p -3.63%
Taylor Wimpey (TW.) 186.50p -3.42%
BT Group (BT.A) 418.20p -3.14%
Inmarsat (ISAT) 903.00p -3.06%
Persimmon (PSN) 1,909.00p -3.00%

FTSE 250 - Risers

AL Noor Hospitals Group (ANH) 1,162.00p 16.84%
Domino's Pizza Group (DOM) 1,003.00p 12.70%
Electrocomponents (ECM) 222.10p 9.14%
Brown (N.) Group (BWNG) 340.30p 7.69%
Auto Trader Group (AUTO) 346.80p 4.43%

FTSE 250 - Fallers

Foxtons Group (FOXT) 215.90p -5.76%
Renishaw (RSW) 1,888.00p -5.27%
Countrywide (CWD) 467.00p -4.60%
Cable & Wireless Communications (CWC) 56.00p -3.70%
Laird (LRD) 358.00p -2.95%