London midday: UK stocks near three-week high as inflation eases

19th Aug 2014 12:07

- UK inflation drops to four-month low of 1.6%- Housebuilders, retailers on the rise- Imperial impresses with results, BHP falls on demerger planstechMARK 2,802.05 +0.72%FTSE 100 6,766.71 +0.38%FTSE 250 15,903.92 +0.68%UK stocks extended their winning streak into the fifth session on Tuesday as a larger-than-expected drop in inflation eased concerns about an imminent rate hike by the Bank of England (BoE).Decent gains from Imperial Tobacco, retailers and housebuilders were providing a lift, offsetting a heavy drop in the share price of mining giant BHP Billiton.The FTSE 100 was up 0.4% at 6,767 by around midday; it has not closed above this level since 30 July.An easing of geopolitical risk was also helping sentiment in morning trade. While crisis talks in Berlin between Ukrainian and Russian officials on Monday failed to result in a ceasefire agreement, reports of progress were being made by the Red Cross on a plan to allow a Russian aid convoy into south-east Ukraine. Meanwhile, Iraqi government troops and Kurdish forces retook the Mosul Dam from Islamic State fighters and a ceasefire between Palestine and Israel was extended by 24 hours in an attempt to reach a truce.Pound drops as rate-hike speculation easesThe annual rate of UK inflation slipped to a four-month low 1.6% in July, down from 1.9% the month before and below the 1.8% consensus forecast.The pound tumbled in the aftermath of the consumer price index (CPI) data to a four-month low against the dollar. The cable fell to a low of 1.6634, the lowest since 8 April. According to Tony Wilson from FEXCO, with CPI now comfortably below the BoE's 2% target, policymakers have no need to use interest rates to tame price rises. "The runes of tomorrow's Monetary Policy Committee minutes will add more detail, but for now the markets' assumption that rate rises are once again in the long grass has sent Sterling down across the board," he said.BHP shares fall on demerger plansDetails of BHP Billiton's hotly-anticipated "portfolio simplification" were unveiled on Tuesday morning but failed to excite the market with the stock slipping sharply into the red. According to analysts, shareholders were likely disappointed that the demerger didn't result in a one-off capital return.The miner announced plans to create an independent company comprising its aluminium, coal, manganese, nickel and silver assets. At the same time the company also reported a 10% rise in underlying attributable profit to $13.4bn for the 12 months to 30 June.Other miners such as Fresnillo, Glencore and Anglo American were also under pressure in London.Imperial Tobacco was on the rise after maintaining its full-year guidance for "modest" earnings growth despite revenues slipping in the first nine months. While conditions remained "tough" in the third quarter, the company said that the market as a whole has slightly improved.Housebuilders were performing well as forecasts for a rate hike were pushed back after the inflation figures. While Persimmon impressed with a 57% jumped in first-half profits, other stocks such as Bellway, Taylor WImpey, Barratt Developments, Redrow and Bovis Homes were also making gains.However, building materials group CRH underwhelmed with its own interim results. The company swung to a profit in the first half, as favourable weather in Europe and an ongoing recovery in the States helped to offset difficult conditions in the wider Americas region.Retail stocks were in demand including Sports Direct, Kingfisher, Supergroup, AO World and Debenhams.FTSE 100 - RisersBarratt Developments (BDEV) 368.60p +2.90%Sports Direct International (SPD) 722.50p +2.77%Kingfisher (KGF) 305.60p +2.07%ITV (ITV) 211.80p +2.07%Imperial Tobacco Group (IMT) 2,577.00p +2.02%easyJet (EZJ) 1,327.00p +2.00%Royal Bank of Scotland Group (RBS) 357.50p +1.79%Whitbread (WTB) 4,402.00p +1.66%Carnival (CCL) 2,311.00p +1.40%Associated British Foods (ABF) 2,894.00p +1.37%FTSE 100 - FallersBHP Billiton (BLT) 1,977.00p -4.35%Fresnillo (FRES) 987.00p -1.60%Rolls-Royce Holdings (RR.) 1,040.00p -1.33%CRH (CRH) 1,441.00p -1.03%Glencore (GLEN) 361.05p -0.84%Anglo American (AAL) 1,586.00p -0.81%Rio Tinto (RIO) 3,388.00p -0.70%Sainsbury (J) (SBRY) 310.30p -0.67%Smiths Group (SMIN) 1,293.00p -0.54%Rexam (REX) 496.40p -0.54%FTSE 250 - RisersCSR (CSR) 574.50p +8.40%AO World (AO.) 212.90p +5.50%Wood Group (John) (WG.) 792.00p +5.39%Supergroup (SGP) 1,128.00p +5.13%Afren (AFR) 110.00p +4.36%Evraz (EVR) 108.40p +3.24%Howden Joinery Group (HWDN) 354.50p +3.11%Ocado Group (OCDO) 362.60p +2.92%Imagination Technologies Group (IMG) 199.80p +2.88%Exova Group (EXO) 235.00p +2.62%FTSE 250 - FallersCairn Energy (CNE) 183.50p -2.08%Petra Diamonds Ltd.(DI) (PDL) 195.30p -1.96%Amlin (AML) 439.90p -1.94%Perform Group (PER) 209.80p -1.92%Ferrexpo (FXPO) 137.00p -1.86%Balfour Beatty (BBY) 245.20p -1.13%Drax Group (DRX) 631.00p -1.10%NMC Health (NMC) 476.00p -0.83%Premier Oil (PMO) 339.60p -0.82%Diploma (DPLM) 669.50p -0.81%BC