London close: Footsie buoyed by miners
Stocks finished near their best levels of the session on the back of gains in miners' shares and as early strength in sterling wore off.
The FTSE 100 was up 0.42% or 30.89 points to 7,331.12, with investors cheered by the fact that, for the moment at least, the worst scenarios had been averted on the global trade front.
Sterling did end the day higher versus the US dollar, adding 0.09% to 1.31578, but an earlier bigger gain on the back of a stronger-than-expected reading on consumer prices for August was erased after the Prime Minister told EU leaders in Salzburg not to "demand the unacceptable".
Earlier, the pound had rallied to 1.3215 against the dollar for the first time in nearly two months immediately after the inflation data was released. Against the euro, sterling was 0.1% lower at 1.1261.
Data released by the Office for National Statistics showed the consumer price index for August was up 2.7% on last year, up from the 2.5% rise in July, versus expectations for a fall to 2.4%. Core CPI, which excludes prices such for food, fuel, alcohol and tobacco, rose to 2.1% on the year, up from 1.9% a month earlier and higher than the 1.8% forecast.
"Consumers paid more for theatre shows, sea fares and new season autumn clothing last month," said ONS head of inflation Mike Hardie. "However, mobile phone charges, and furniture and household goods had a downward effect on inflation."
Producer prices inflation dropped to 8.7% from 10.3% and factory gate inflation to 2.9% from 3.1%, which would suggest underlying CPI is in line to soften in coming months.
Oanda analyst Craig Erlam noted the strong response from the pound but said the data does not change much from an interest rates perspective, especially as the Bank of England has just recently hiked rates to post-financial crisis highs and shown a willingness to proceed with caution over the coming years.
"We're also heading into a crucial period for Brexit talks and I think policy makers will want to withdraw from the spotlight during that time and then reassess the situation once the terms of the divorce are clearer.
"The increase itself may also be temporary and reflect firms taking advantage of a great summer and enthusiastic consumer, something that may take its toll in the months ahead. I don’t expect the BoE to react too much to this summer spike and instead take a more conservative view unless we see further evidence of it becoming a longer-term trend."
Trade relations remained in focus after China retaliated against Trump's 10% levy on another $200bn of Chinese imports - which could rise to 25% in the New Year - with new trade tariffs on $60bn of US goods. Trump then responded by repeating his threat to raise tariffs on another $267bn of Chinese imports.
Miners were the standout gainers, with Anglo, Glencore and Antofagasta all firmer as copper prices rose.
Industrial software provider Aveva pushed higher after saying its full-year outlook remains in line with the board's expectations and that it aims to increase its adjusted EBIT margins to 30%. It was also boosted by an upgrade to 'buy' from 'add' at Numis.
Babcock International rallied after the engineering services company said it is trading in line with its expectations, the order book and pipeline are strong and its outlook for the year is unchanged.
Construction group drifted lower as it sold its 50% stake in Fife Hospital for £43m in cash to Semperian PPP Investment Partners, resulting in a profit of £22m.
Stagecoach also fell, as the transport group said like-for-like revenue at its UK regional bus and rail operations has grown in the year to date.
On the downside, Sainsbury's reversed earlier gains to trade lower as its merger with Asda was referred to an in-depth competition investigation with a deadline of March next year. The Competition and Markets Authority confirmed that the deal raises sufficient concerns to be referred for a more in-depth review, including on issues relating to fuel, general merchandise and increased ‘buyer power’ over suppliers. Morrisons and Tesco were both lower, even though the latter launched its new cut-price brand, Jack's, in the Cambridgeshire town of Chatteris.
Elsewhere in retail, B&Q and Castorama owner Kingfisher slumped after posting a 15% drop in first-half profit on the back of a poor performance from its French business.
Royal Mail slipped after announcing that chairman Peter Long has stepped down with immediate effect in order to concentrate on his role as executive chairman at Countrywide, while John Laing Infrastructure declined as it agreed the terms of its proposed £1.4bn takeover by a consortium of funds.
On the broker note front, HSBC cut Jardine Lloyd Thompson to 'hold', but SSE was double upgraded to 'buy' at Deutsche Bank and Smiths Group was initiated at 'buy' by Citi. Bunzl was started at 'equalweight' by Morgan Stanley.
Market Movers
FTSE 100 (UKX) 7,331.12 0.42%
FTSE 250 (MCX) 20,500.45 0.21%
techMARK (TASX) 3,485.81 0.36%
FTSE 100 - Risers
Antofagasta (ANTO) 837.00p 5.87%
Anglo American (AAL) 1,655.80p 5.05%
Prudential (PRU) 1,725.50p 3.70%
Fresnillo (FRES) 825.60p 3.67%
Evraz (EVR) 527.40p 3.57%
Glencore (GLEN) 319.60p 3.53%
Standard Chartered (STAN) 617.50p 3.30%
BHP Billiton (BLT) 1,598.80p 3.18%
Rio Tinto (RIO) 3,722.50p 2.96%
GVC Holdings (GVC) 998.00p 2.73%
FTSE 100 - Fallers
Kingfisher (KGF) 247.00p -6.30%
NMC Health (NMC) 3,336.00p -3.08%
National Grid (NG.) 773.90p -2.69%
Royal Mail (RMG) 474.10p -2.37%
Severn Trent (SVT) 1,844.00p -2.35%
Relx plc (REL) 1,503.50p -2.27%
Ocado Group (OCDO) 899.40p -2.22%
Unilever (ULVR) 4,144.50p -2.19%
Rentokil Initial (RTO) 312.60p -2.16%
United Utilities Group (UU.) 690.00p -2.07%
FTSE 250 - Risers
Kaz Minerals (KAZ) 516.80p 7.22%
IWG (IWG) 224.40p 5.06%
Weir Group (WEIR) 1,737.50p 4.79%
Ferrexpo (FXPO) 171.95p 4.66%
Polymetal International (POLY) 626.00p 4.37%
IP Group (IPO) 130.00p 3.82%
AA (AA.) 122.25p 3.56%
Investec (INVP) 535.00p 3.53%
Quilter (QLT) 138.20p 3.41%
Babcock International Group (BAB) 715.60p 3.41%
FTSE 250 - Fallers
Dechra Pharmaceuticals (DPH) 2,362.00p -4.29%
Sanne Group (SNN) 634.00p -3.94%
Rank Group (RNK) 176.40p -3.92%
Greencore Group (GNC) 182.70p -3.91%
On The Beach Group (OTB) 490.00p -3.54%
Energean Oil & Gas (ENOG) 548.00p -3.52%
CLS Holdings (CLI) 219.00p -3.31%
Contour Global (GLO) 204.20p -3.07%
Go-Ahead Group (GOG) 1,655.00p -2.88%
JD Sports Fashion (JD.) 485.70p -2.73%