London midday: Stocks rally as investors snap up miners and oil majors

(Sharecast News) - London stocks had jumped by midday on Wednesday, mirroring European markets, as investors digested better-than-expected inflation data and targeted mining and oil shares.

Following a cautious open, the FTSE 100 was ahead 1.20% at 10,713.14 by midday, while the FTSE 250 was up 0.29% at 23,820.94.

In Europe, the CAC 40 was up 0.89% and DAX 40 was up 0.96%. The rises came despite a sharp uplift in oil prices, with Brent rising 4% at $94.36 a barrel and West Texas Intermediate 3% stronger at $87.26, as tensions between the US and Iran mounted.

Kathleen Brooks, research director at XTB, said: "European stock indices are brushing off the rise in the oil price and are higher today, after a stunning rally for US chip stocks on Tuesday.

"The FTSE 100 is the top performer in Europe, and is being led higher by miners, oil companies, banks and insurers. For now, the UK index is in a good spot, as its defensive qualities and high number of miners and oil companies benefit from rising geopolitical tensions."

Among the biggest blue chip risers, Endeavour Mining was up 4%, Fresnillo was ahead 3%, Prudential was 3% stronger and Standard Chartered was 3% higher. Energy majors BP and Shell were both 1% stronger on the back of the spike in oil prices.

Traders were also looking across the Atlantic, with a busy day due for tech earnings, including updates from Tesla and Google-owner Alphabet.

David Morrison, senior market analyst at Trade Nation, said: "The early weakness across US stock index futures was tech related. Investors took profits in chip stocks after this week's rebound, which follows a sharp sell-off at the end of last week. As European indices have a relatively small exposure to tech, they tend to do well on any rotation out of tech when investors look around for attractive value plays."

Closer to home, and figures released before the start of trading by the Office for National Statistics showed inflation eased to 2.6% in the 12 months to June from 2.8% in May. Economists had expected a slightly smaller dip to 2.7%.

The ONS said transport, and food and non-alcoholic beverages made the largest downward contributions to the change. Core CPI - which excludes energy, food, alcohol and tobacco - rose 2.6% in June, unchanged from May.

The update comes as new prime minister Andy Burnham begins to roll out measures intended to ease the cost of living, including removing VAT on household electricity bills. New chancellor John Healey said falling inflation was "news families want to hear, but there is much more to do to give people the breathing space they need".

Most expect the Bank of England to leave interest rates on hold at 3.75% when the Monetary Policy Committee meets next week. However, economists continue to believe that renewed hostilities in the Middle East could push inflation higher in the coming months.

In corporate news, shares in Segro soared after US real estate giant Prologis upped its proposed takeover bid to �14bn, the latest twist in its pursuit of the blue chip landlord. The American firm has until end of play on Wednesday to make a firm offer or walk away, but so far Segro has rebuffed all previous approaches.

Mexico-focused miner Fresnillo pushed higher, despite posting a dip in first-half silver and gold production, after it reaffirmed full-year guidance. Chief executive Octavio Alvidrez said the company's operational plans were tracking in line with expectations. "Our focus remains firmly on operational discipline, and we remain on track to meet our full-year production guidance."

In the FTSE 250, pub chain JD Wetherspoon tumbled after it warned annual profits were likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher food, labour, repairs, energy and business rate costs.

In an unusually brief trading update, the company said like-for-like sales increased 4% in the 12 weeks to 19 July, compared to the same period last year. Year-to-date like-for-like sales increased by 4.2%. By midday the stock was leading the fallers board, having lost 8%.

Richard Hunter, head of markets at Interactive Investor, said: "Wetherspoon's dogged determination to fight its corner has won the brand many friends, but from an investment perspective the jury remains out on the prospects. The group's value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits."

Convenience foods manufacturer Greencore surged as it said full-year adjusted operating profit would be above market expectations.

Market Movers

FTSE 100 (UKX) 10,713.14 1.20%

FTSE 250 (MCX) 23,820.94 0.29%

techMARK (TASX) 5,941.89 0.80%

FTSE 100 - Risers

SEGRO (SGRO) 897.60p 3.38%

Prudential (PRU) 1,100.00p 3.00%

Reckitt Benckiser Group (RKT) 5,080.00p 2.81%

Experian (EXPN) 2,773.00p 2.59%

SSE (SSE) 2,515.00p 2.57%

Standard Chartered (STAN) 2,157.00p 2.52%

Fresnillo (FRES) 2,631.00p 2.30%

Barratt Redrow (BTRW) 292.50p 2.24%

AstraZeneca (AZN) 12,714.00p 2.16%

Aviva (AV.) 690.00p 2.10%

FTSE 100 - Fallers

Flutter Entertainment (DI) (FLTR) 7,536.00p -2.59%

Burberry Group (BRBY) 1,064.50p -2.16%

IG Group Holdings (IGG) 1,715.00p -1.49%

Games Workshop Group (GAW) 19,930.00p -1.04%

The Sage Group (SGE) 827.80p -0.89%

Halma (HLMA) 3,586.00p -0.83%

Next (NXT) 14,845.00p -0.74%

Metlen Energy & Metals (MTLN) 43.86p -0.64%

Entain (ENT) 551.00p -0.61%

Investec (INVP) 628.50p -0.55%

FTSE 250 - Risers

AEP Plantations (AEP) 182.00p 7.06%

Bridgepoint Group (Reg S) (BPT) 324.40p 4.80%

Rosebank Industries NPV (ROSE) 335.50p 3.70%

Endeavour Mining (EDV) 3,687.00p 3.69%

Pan African Resources (PAF) 95.70p 3.46%

Kier Group (KIE) 240.60p 3.27%

W.A.G Payment Solutions (EWG) 103.60p 3.20%

Hays (HAS) 55.40p 3.16%

Bellway (BWY) 1,961.00p 2.89%

Helios Towers (HTWS) 195.90p 2.68%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 696.00p -7.63%

Ninety One (N91) 208.00p -4.42%

Quilter (QLT) 196.20p -3.77%

VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 420.00p -3.45%

Jupiter Fund Management (JUP) 164.20p -3.41%

Vietnam Enterprise Investments (DI) (VEIL) 687.00p -3.10%

Watches of Switzerland Group (WOSG) 738.50p -2.70%

Foresight Group Holdings Limited NPV (FSG) 475.50p -2.66%

Mony Group (MONY) 193.50p -2.47%

Hansa Investment Company Limited (DI) (HAN) 322.00p -2.42%