London midday: Stocks gain after better-than-expected UK inflation

UK consumer prices grew 0.5% from a year earlier in March, beating analysts' estimates of 0.4%, as an early Easter lifted air fares and clothing prices rose, the Office for National Statistics revealed.

It marked an improvement on February's 0.3% gain and it was the fastest pace of growth since December 2014.

Core inflation, which excludes volatile food and energy prices, jumped 1.5% year-on-year in March, compared to forecasts of 1.3% and the previous month's 1.2% increase.

Inflation remains well below the Bank of England's 2% target and the central bank is expected to keep interest rates unchanged when it announces its latest policy decision on Thursday.

"Today’s increase is unlikely to spur the Bank of England into considering raising interest rates on Thursday with widespread consensus that this week will see the 85th consecutive month that the bank keeps interest rates on hold at their emergency level of 0.50%," said Maike Currie, investment director for personal investing at Fidelity International.

The pound rebounded following the report, rising 0.48% against the dollar.

Separately the ONS revealed UK house price growth surprisingly eased to a 7.6% annual rate of growth in February from a 7.9% rise the previous month. The average UK house price cost £284,000 in February.

Still to come, investors are awaiting the International Monetary Fund’s latest economic growth forecasts at 1400 BST. The IMF is expected to cut its estimates amid a slowdown in emerging markets.

On the US agenda, there will be the NFIB business optimism survey at 1100 BST and the monthly budget statement at 1900 BST.

In commodities, oil prices ticked higher ahead of a 17 April meeting between global producers on whether to freeze output.

“The meeting on Sunday comprises of producers of around three quarters of global output and if a deal is agreed on a production freeze or even a cut, the latter of which is very unlikely, it could be the catalyst that drives the next rally in oil and take it back above $50 for the first time since November,” said Craig Erlam, senior market analyst at Oanda.

“There are a lot of obstacles to such a deal being done though, not least Iran’s determination to return to pre-sanctions production levels, which makes me sceptical that it can be achieved.”

Brent crude rose 1.26% to $43.38 per barrel and West Texas Intermediate gained“0.78% to $40.68 per barrel at 1128 BST.

In company news, mining stocks were among the biggest risers as metal prices rose. Anglo American, BHP Billiton, Glencore and Rio Tinto gained.

Banking shares, including Standard Chartered, Barclays and Lloyds Banking Group, rallied after Italy’s government set up rescue fund to help struggling banks.

Ashtead slumped after HSBC downgraded its rating on the stock to ‘hold’ from ‘buy’, saying the age of the equipment rental company’s fleet “may not be materially younger than that of the peers” following an examination.

Burberry was in the red after rival luxury fashion retailer LVMH reported first quarter earnings that missed analysts’ estimates, hurt by subdued tourist shopping in key markets such as France and Hong Kong.

Whitbread dropped after announcing the departure of managing director Christopher Rogers.

Galliford Try advanced as the construction firm said the cost of its exposure to the Edinburgh schools scandal was “not material to the group”.

Market Movers

FTSE 100 (UKX) 6,195.76 -0.07%
FTSE 250 (MCX) 16,775.52 -0.02%
techMARK (TASX) 3,135.63 -0.27%

FTSE 100 - Risers

Anglo American (AAL) 616.40p 5.35%
Standard Chartered (STAN) 470.20p 4.97%
Glencore (GLEN) 145.50p 2.83%
BHP Billiton (BLT) 799.60p 2.75%
Rio Tinto (RIO) 2,075.00p 2.19%
Randgold Resources Ltd. (RRS) 6,845.00p 1.94%
Fresnillo (FRES) 979.00p 1.87%
Prudential (PRU) 1,334.50p 1.64%
Direct Line Insurance Group (DLG) 361.00p 1.60%
Lloyds Banking Group (LLOY) 66.50p 1.50%

FTSE 100 - Fallers

Ashtead Group (AHT) 812.50p -3.50%
Burberry Group (BRBY) 1,265.00p -2.47%
Whitbread (WTB) 3,752.00p -2.09%
Intu Properties (INTU) 310.70p -2.05%
Rolls-Royce Holdings (RR.) 652.00p -1.81%
Sainsbury (J) (SBRY) 286.20p -1.62%
Persimmon (PSN) 1,963.00p -1.60%
Marks & Spencer Group (MKS) 436.50p -1.56%
Intertek Group (ITRK) 3,113.00p -1.55%
ITV (ITV) 237.40p -1.37%

FTSE 250 - Risers

Amec Foster Wheeler (AMFW) 470.30p 4.05%
Kaz Minerals (KAZ) 163.30p 3.81%
Vedanta Resources (VED) 372.50p 3.76%
Zoopla Property Group (WI) (ZPLA) 254.00p 3.50%
Ashmore Group (ASHM) 299.10p 3.39%
Evraz (EVR) 102.80p 3.26%
Galliford Try (GFRD) 1,338.00p 3.16%
NMC Health (NMC) 1,183.00p 2.78%
Centamin (DI) (CEY) 103.40p 2.58%
IP Group (IPO) 160.80p 2.42%

FTSE 250 - Fallers

Cranswick (CWK) 2,408.00p -5.12%
Vesuvius (VSVS) 295.50p -3.21%
Countrywide (CWD) 364.00p -2.70%
Indivior (INDV) 167.80p -2.44%
Ted Baker (TED) 2,580.00p -2.09%
Capital & Counties Properties (CAPC) 332.10p -2.01%
Ophir Energy (OPHR) 76.35p -1.99%
RPC Group (RPC) 755.50p -1.88%
Senior (SNR) 217.50p -1.76%
Hastings Group Holdings (HSTG) 168.90p -1.75%