(Sharecast News) - London stocks had popped into the black by midday on Wednesday, helped along by gains for the likes of Ithaca Energy after the government approved the Jackdaw gas field in the North Sea, as a bigger-than-expected rise in inflation cemented rate hike expectations.
The FTSE 100 was up 0.1% at 10,741.64, reversing earlier declines.
Figures from the Office for National Statistics showed that inflation soared to the highest annual rate in almost a year last month as transport costs soared. The consumer price index rose by 3.5% in the 12 months to September, up from 3.1% in August. It was also slightly above forecasts for 3.4%.
The largest upward contribution came from transport, particularly motor fuels, with prices in the segment jumping 6.6%, up from 4.6% a month earlier. The average price of petrol rose to 169.5p per litre, the highest since August 2022, while the cost of diesel was the steepest since July 2022.
Core CPI, which strips out more volatile energy, food, alcohol and tobacco prices, rose by 2.8%, up from 2.5% in August.
Grant Fitzner, chief economist at the ONS, said: "Other upward pressures included airfares and, to a lesser extent, computer games and live events, which are often volatile.
"These were partially offset by the cost of hotel stays, where prices rose by less than this time last year."
Martin Sartorius, lead economist at the Confederation of British Industry, said: "September's rise in inflation means that a rate hike will remain firmly on the table at the Monetary Policy Committee's next meeting. While there have been limited signs of higher energy costs feeding into domestic price pressures so far, the MPC will likely want to guard against the risk of persistently higher headline inflation becoming embedded in future wage and price-setting behaviour."
Other data released by the ONS showed an 8.3% hike in producer input prices in the year to September, up from a revised 6.7% gain in August and well ahead of forecasts for a 7.6% jump. Factory gate prices spiked 4.6%, the highest since April 2023, against August's 3.8% rise. A surge in the price of crude oil was the largest contributory factor.
There was also an update on public sector borrowing, which came in £24.5bn in September, up £1.8bn year-on-year, as government spending - including higher debt interest costs - increased by more than inflation. Borrowing in the financial year to September remained below the same period a year earlier, at £97.8bn, but ahead of the Office for Budget Responsibility's forecast.
In equity markets, Ithaca Energy, BP and Shell gained after the UK government said it had approved plans to begin drilling in the Jackdaw gas field in the North Sea. Jackdaw is owned and operated by Adura, which is a joint venture between Shell and Equinor, Norway's state oil company.
Neil Wilson, UK investor strategist at Saxo Markets, said Ithaca was likely being boosted by "hopes that the approval signals the government will also greenlight its Rosebank project".
Recruiters Michael Page and Hays were the top performers on the FTSE 250 after well-received earnings from Randstad.
On the downside, Aberdeen slid despite posting a rise in third-quarter assets under management and administration, reflecting positive markets and acquisitions.
Precious metals miner Fresnillo lost its shine as it reported a drop in third-quarter silver and gold production but maintained its full-year guidance, while Hochschild also fell after a production report.
Halfords backed its full-year profit expectations and hailed "strong" trading in the first half, but shares of the provider of motoring and cycling products and services slumped as indications of a weaker second half prompted investors to take some profits.
Domino's Pizza fell as it maintained full-year expectations but reported a slowdown in like-for-like sales growth in Q3.
Market Movers
FTSE 100 (UKX) 10,741.64 0.08%
FTSE 250 (MCX) 24,362.13 -0.01%
techMARK (TASX) 6,214.70 0.12%
FTSE 100 - Risers
Ithaca Energy (ITH) 301.70p 2.90%
Computacenter (CCC) 5,075.00p 2.73%
BP (BP.) 618.80p 2.15%
Convatec Group (CTEC) 240.00p 1.95%
Experian (EXPN) 2,952.00p 1.48%
Lion Finance Group (BGEO) 12,500.00p 1.46%
Admiral Group (ADM) 3,796.00p 1.33%
WPP (WPP) 400.00p 1.21%
Compass Group 11 (CPG) 33.00p 1.13%
Games Workshop Group (GAW) 16,830.00p 1.02%
FTSE 100 - Fallers
Abrdn (ABDN) 226.40p -3.66%
3i Group (III) 2,331.00p -3.47%
Fresnillo (FRES) 2,627.00p -2.31%
Kingfisher (KGF) 339.50p -2.10%
Antofagasta (ANTO) 3,236.00p -1.67%
United Utilities Group (UU.) 1,477.00p -1.01%
Anglo American (AAL) 3,857.00p -1.00%
Unilever (ULVR) 4,859.50p -0.89%
Whitbread (WTB) 2,621.00p -0.87%
ICG (ICG) 1,783.00p -0.83%
FTSE 250 - Risers
Michael Page (PAGE) 204.80p 8.99%
Hays (HAS) 59.00p 7.50%
Rank Group (RNK) 81.20p 6.14%
Entain (ENT) 455.60p 4.69%
Seraphim Space Investment Trust (SSIT) 187.80p 3.53%
Genus (GNS) 2,298.00p 3.33%
Hansa Investment Company Limited (DI) (HAN) 336.00p 3.07%
Ceres Power Holdings (CWR) 288.40p 3.00%
Globaldata (DATA) 66.50p 2.31%
Oxford Biomedica (OXB) 532.00p 2.11%
FTSE 250 - Fallers
Halfords Group (HFD) 256.50p -7.73%
Domino's Pizza Group (DOM) 229.80p -3.12%
Trustpilot Group (TRST) 275.20p -3.10%
B&M European Value Retail (BME) 270.80p -3.01%
Hochschild Mining (HOC) 490.80p -3.00%
Trainline (TRN) 223.20p -2.19%
Wetherspoon (J.D.) (JDW) 1,049.00p -1.96%
Man Group (EMG) 324.80p -1.93%
Ocado Group (OCDO) 342.60p -1.89%
Bridgepoint Group (Reg S) (BPT) 393.40p -1.75%
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