London midday: Deflation fears hit stocks as Eurozone consumer prices fall

Consumer prices in the single-currency region decline at an annual rate of 0.6% in January after a 0.2% fall in December, worse than the 0.5% drop expected.

It marked the largest decrease since July 2009 and comes after the European Central Bank (ECB) announced a €60bn a month quantitative easing package to address the risk of deflation. The ECB is trying to move inflation towards its target of just below 2%.

“Deflation is particularly worrying in the Eurozone given the high levels of indebtedness in many members, as falling prices increase the real value of the debt, making these debts harder to service,” said Ben Brettell, an economist at Hargreaves Lansdown.

London’s FTSE 100 was down 0.35% at 6,787 by midday.

There was a host of other economic news for investors to digest on Friday, such as an improvement in UK consumer confidence, a less-than-expected rise in German retail sales, a fall in Eurozone unemployment and an increase in UK mortgage approvals.

The preliminary estimate of fourth-quarter US gross domestic product (GDP) is due out later on and is forecast to show that the annualised rate of expansion eased to 3% from 5% in the third quarter.

Qatar Airways invests in IAG, miners gain

After an initial rise, British Airways and Iberia owner IAG fell into the red despite the news that Qatar Airways has bought a 9.99% stake in the company. While the Doha-based group said it may consider raising its interest in IAG over time, analysts at Liberum said a full takeover was “highly unlikely”.

Mining stocks were performing well with Fresnillo and Randgold advancing after heavy falls on Thursday. Anglo American and BHP Billiton were also higher.

Telecoms giant BT declined despite beating analysts forecasts with a solid rise in profits in its third quarter, as it announced a new 16-year “recovery plan” to pay down its expanding pension deficit, which now stands at £7bn. The company also revealed that it would upgrade its fibre network with large-scale pilots this summer of ultrafast broadband with G.fast.

Supermarket stocks were also under pressure, with Sainsbury, Morrison and Tesco among the worst performers.

Oil producer Afren was continuing its volatile moves, jumping 26%. Friday is the deadline for Nigerian producer Seplat to make a firm offer for the UK group, though analysts believe that Afren could extend the ‘put up or shut up’ date once again.

Market Movers
techMARK 3,064.74 -0.57%
FTSE 100 6,786.87 -0.35%
FTSE 250 16,333.87 -0.15%

FTSE 100 - Risers
Fresnillo (FRES) 898.00p +4.12%
Weir Group (WEIR) 1,687.00p +2.49%
Randgold Resources Ltd. (RRS) 5,555.00p +2.49%
Tullow Oil (TLW) 359.40p +2.42%
Dixons Carphone (DC.) 432.80p +2.03%
Anglo American (AAL) 1,117.00p +1.78%
Smiths Group (SMIN) 1,127.00p +1.53%
BG Group (BG.) 894.30p +1.52%
BHP Billiton (BLT) 1,433.00p +1.38%
Centrica (CNA) 295.60p +1.03%

FTSE 100 - Fallers
Sainsbury (J) (SBRY) 257.70p -2.31%
BT Group (BT.A) 419.50p -2.24%
Severn Trent (SVT) 2,151.00p -2.18%
Bunzl (BNZL) 1,893.00p -2.17%
Diageo (DGE) 1,983.50p -1.93%
Hargreaves Lansdown (HL.) 1,015.00p -1.74%
Morrison (Wm) Supermarkets (MRW) 181.80p -1.68%
Royal Dutch Shell 'A' (RDSA) 2,030.00p -1.46%
United Utilities Group (UU.) 1,027.00p -1.44%
London Stock Exchange Group (LSE) 2,377.00p -1.41%

FTSE 250 - Risers
Afren (AFR) 5.30p +26.19%
Ophir Energy (OPHR) 134.30p +4.51%
Brit (BRIT) 274.80p +3.89%
Petrofac Ltd. (PFC) 694.50p +3.89%
Millennium & Copthorne Hotels (MLC) 585.00p +3.82%
Enterprise Inns (ETI) 108.20p +3.34%
AL Noor Hospitals Group (ANH) 916.00p +2.58%
Telecom Plus (TEP) 1,090.00p +2.35%
Allied Minds (ALM) 440.00p +2.33%
Mitchells & Butlers (MAB) 431.40p +1.87%

FTSE 250 - Fallers
Zoopla Property Group (WI) (ZPLA) 183.20p -3.93%
Cobham (COB) 330.60p -3.70%
Oxford Instruments (OXIG) 737.50p -3.66%
Infinis Energy (INFI) 189.80p -3.26%
Genus (GNS) 1,215.00p -2.49%
Cranswick (CWK) 1,302.00p -2.47%
Hunting (HTG) 384.70p -2.43%
Greggs (GRG) 810.00p -2.41%
Rank Group (RNK) 174.00p -2.25%
Go-Ahead Group (GOG) 2,467.00p -2.18%