London close: Surge in UK inflation sees sterling, FTSE lower with miners suffering

The FTSE 100 closed down 0.69% or by 51.47 points to 7,378.34, and the FTSE 250 closed 0.86% lower to 18,988.02. Both -- especially the blue chip -- are sensitive to the Brexit-weakened sterling's ebb and flow.

Earlier on Tuesday, Office for National Statistics said the UK consumer-price index (CPI), an inflation gauge, hit 2.3% in February, above Bank of England's 2% target for the first time in more than three years and also ahead of market views for 2.1%.

Core CPI, which stripped out volatility, and the CPIH, which included housing, also shot above expectations. This was as UK public sector net borrowing fell £2.8bn to £1.8bn, the lowest February borrowing since 2007 and below forecasts for £3.2bn.

"The pound's post-inflation increase boost continued into the afternoon, creating a heavier and heavier weight for the FTSE," said Connor Campbell, financial analyst at Spreadex.

"It will be now interesting to see whether the pound can maintain these gains as attention shifts to next week's triggering of Article 50 (on 29 March), or whether its current highs merely give it more room to fall," said Campbell.

Other commentators looked to the difficulty now faced by Bank of England (BoE) governor Mark Carney, and in particular his conundrum of wanting to ease interest rates in the face of Brexit headwinds, and the need to tighten to keep inflation down.

Across the Channel, Germany's Dax, France's Cac 40 and the region's Euro Stoxx 50 were all moderately lower. In the US, the Dow Jones, S&P 500 and Nasdaq Composite were heavily lower.

US indices were dented by dollar weakness, which was only compounded by sterling's gains, while euro gains had impacted equities indices in the bloc.

Back in London, there was a dearth of blue-chip corporate news flow, which meant many FTSE 100 incumbents were reacting to wider events.

"When markets turn, it is always easy to find a cause," said IG chief market analyst Chris Beauchamp.

"The quick turn lower (of stocks) this afternoon has certainly spooked an investment community that had become accustomed, however reluctantly, to a steady, attritional grind higher," he added, cautioning trading on reactive over-excitement.

"Already buyers are coming in to pick up some easy points from the S&P 500, an indication that it is still too early to give this (so-called Trump) rally the last rites."

Market Movers

FTSE 100 (UKX) 7,378.34 -0.69%
FTSE 250 (MCX) 18,988.02 -0.86%
techMARK (TASX) 3,456.77 -0.93%

FTSE 100 - Risers

Fresnillo (FRES) 1,553.00p 1.64%
Bunzl (BNZL) 2,365.00p 1.28%
National Grid (NG.) 1,000.50p 1.00%
Admiral Group (ADM) 1,992.00p 0.76%
Coca-Cola HBC AG (CDI) (CCH) 2,006.00p 0.75%
Barclays (BARC) 230.00p 0.74%
Standard Life (SL.) 366.40p 0.74%
Convatec Group (CTEC) 261.50p 0.69%
Pearson (PSON) 656.00p 0.69%
RSA Insurance Group (RSA) 597.50p 0.67%

FTSE 100 - Fallers

Glencore (GLEN) 330.10p -4.24%
Rio Tinto (RIO) 3,327.00p -4.12%
BHP Billiton (BLT) 1,283.50p -3.97%
Anglo American (AAL) 1,247.00p -2.50%
Antofagasta (ANTO) 829.50p -2.35%
3i Group (III) 717.50p -2.25%
Ashtead Group (AHT) 1,649.00p -2.08%
Smurfit Kappa Group (SKG) 2,162.00p -1.91%
St James's Place (STJ) 1,057.00p -1.86%
TUI AG Reg Shs (DI) (TUI) 1,118.00p -1.84%

FTSE 250 - Risers

Hastings Group Holdings (HSTG) 265.80p 5.88%
Vectura Group (VEC) 163.00p 3.56%
Tullow Oil (TLW) 203.70p 3.14%
Hochschild Mining (HOC) 275.00p 2.27%
CLS Holdings (CLI) 1,744.00p 2.17%
Ted Baker (TED) 2,834.00p 2.05%
Shawbrook Group (SHAW) 312.00p 1.96%
Travis Perkins (TPK) 1,510.00p 1.62%
Hunting (HTG) 542.00p 1.12%
Sanne Group (SNN) 655.00p 1.08%

FTSE 250 - Fallers

Ferrexpo (FXPO) 163.00p -6.48%
Allied Minds (ALM) 360.10p -5.47%
Kaz Minerals (KAZ) 491.80p -5.42%
Berendsen (BRSN) 812.50p -5.30%
Ocado Group (OCDO) 246.00p -4.76%
Hill & Smith Holdings (HILS) 1,263.00p -4.46%
Evraz (EVR) 221.30p -4.41%
Vedanta Resources (VED) 846.00p -4.03%
Just Eat (JE.) 569.50p -3.39%
Homeserve (HSV) 546.50p -3.27%

Meanwhile, a hefty fall in industrial-staple copper's pricing and dollar weakness saw miners Rio Tinto, BHP Billiton, Glencore, Anglo American and Antofagasta all retreating by significant percentages and leading the FTSE 100 down.

Pharmaceutical companies such as Shire and Hikma reversed, as did several retail-related stocks -- including Burberry, Morrisons and Sainsbury -- due to concerns about the impact of UK inflation on consumer spending.

Blue-chip equities appreciating included gold specialists Randgold Resources and Fresnillo, with a bunch of utilities, commercial property and house builders also creeping higher.