By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- U.K. stocks climbed for a fifth straight
day on Tuesday as weaker-than-expected inflation data eased
pressure on the Bank of England to tighten monetary policy this
year.
The FTSE 100 index gained 0.5% to 6,774.80, setting it on track
for the highest close in almost three months.
Helping push the index higher, heavyweight oil firms advanced as
oil prices moved closer to $97 a barrel. Shares of BP PLC (BP) put
on 0.7% and Royal Dutch Shell PLC (RDSB) rose 0.7%.
Investors also welcomed the latest reading on U.K. inflation,
which showed consumer prices grew by 1.6% in July, down from 1.9%
in June and missing analyst expectations of a 1.8% reading. With
the U.K. economy on a solid recovery track, a rapid decline in
unemployment and inflation last month close to the BOE's 2% target,
some economists had started to speculate that a rate hike could
come as soon as November.
However, the July inflation data give the BOE's Monetary Policy
Committee more reason to keep interest rates at a record low until
the first quarter of 2015, Jake Trask, corporate dealer at UKForex,
said in a note.
"With dovish comments from BOE Governor Mark Carney last week,
this fall in inflation will provide the MPC with even more reason
to hold out," he said. "We may learn more tomorrow about the
intended time frame for a rate hike when the minutes of the latest
MPC meeting are released."
The pound (GBPUSD) dropped after the data, trading at $1.6644,
down from $1.6692 ahead of the report. In late U.S. trade on Monday
the pound traded around $1.673.
Also falling in London, shares of BHP Billiton PLC (BHP) slid
3.9% after the mining firm said it will spin off several assets,
including its nickel mines and aluminum smelters, which will be
listed on Australia's stock exchange. The company also reported a
23% rise in annual profit.
Among other notable movers, shares of AstraZeneca PLC (AZN)
gained 0.7% after the U.S. Department of Justice dropped an
investigation into Plato, a clinical trial with heart drug
Brilinta.
House builder Persimmon PLC rose 0.7% after posting a 57%
increase in first-half pretax profit as it sold 28% more homes at
higher prices, and reported "encouraging" summer trading. The
earnings report comes a day after Rightmove, a company tracking
real-estate prices in the U.K, said asking prices fell by 2.9% in
August.
Other home builders further rose in London on Tuesday, with
shares of Barratt Developments PLC up 2.7% and Taylor Wimpey PLC up
1.6%.
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