London’s markets ended higher as investors were boosted by data which suggested the US had got a firm grip on its inflation problem.
The FTSE 100 index ended 0.4 per cent higher up to 7,616.38 while the mid-cap FTSE 250 index climbed 0.3 per cent to 18,986.76.
Although US inflation increased slightly for the first time in 13 months, analysts said it would not be enough to provoke the Federal Reserve into hiking interest rates once more.
The headline consumer price index (CPI) rose to 3.2 per cent in the year to July, according to official statistics out today, up from 3.0 per cent last month but marginally lower than market expectations. Month on month, prices increased 0.2 per cent.
Core inflation, which strips out more volatile components such food and energy prices, fell to 4.7 per cent from 4.8 per cent last month. This came thanks to falling used car prices and airline fares. On a monthly basis, core inflation climbed 0.2 per cent.
“For now, the July CPI results may tend to reinforce an overall impression for most FOMC policymakers that inflation pressures are diminishing,” HSBC’s US analyst Ryan Wang commented.
US markets rose following the reading, with the S&P 500, the Dow Jones and the NASDAQ all rising around 0.7 per cent.
The pound climbed 0.11 per cent against the dollar to trade at $1.2731, with the dollar softening after the reading.
Engineering firm Spirax Sarco fell to near the bottom of the FTSE after its profit and revenue came in below expectations. Its shares were trading around 2.8 per cent lower.
“Spirax are basically suffering from a destocking trend already seen by other biopharma suppliers such as Germany’s Sartorius,” Clayton said.
Ladbrokes owner Entain’s shares climbed 2.8 per cent despite setting aside £585m to cover a potential settlement as it nears an end of a bribery investigation into its legacy Turkish facing business.
In an update posted this morning, the global betting giant said it has “a sufficient degree of confidence to take a provision of £585m against a potential settlement” to resolve the alleged bribery offences.
Natwest, Barclays, HSBC and Standard Chartered also fell as they traded ex-dividend, meaning investors who buy shares today will not be entitled to the next dividend payment.