- UK inflation rises more than forecast
- Carney addresses concerns over housing market
- Yellen says interest rates to remain low
- US retail sales increase less than estimated
techMARK 2,780.08 -0.50%
FTSE 100 6,710.45 -0.53%
FTSE 250 15,440.48 -0.88%
London stocks slipped as Bank of England (BoE) Governor Mark Carney highlighted concerns over the housing market and as UK inflation rose more than expected.
Carney today appeared before UK lawmakers to discuss last month's half-yearly Financial Stability report, addressing worries over accelerating house prices in the UK.
He said prices are now an average of nine times' one salary and were the direct result of personal indebtedness on the banking system.
The BoE is therefore undergoing a stress test based on a worst case scenario of a 35% drop in house prices, plummeting employment levels and a three-year recession.
On interest rates, Carney said he was unsure of the timing of an increase but will be "driven by the data".
In other UK news, inflation rose more than forecast in June to a level just below the BoE's target of 2%, the Office for National Statistics (ONS) revealed today.
The consumer price index (CPI) climbed 1.9% in the year to June from 1.5% in May, surprising analysts who had expected a 1.6% increase.
The ONS said the rise was driven by clothing, food, non-alcoholic drinks and air transport sectors.
"Overall, some of this upward surprise may be the usual noise from timing and seasonal issues. But it's hard not to conclude that this looks like a good old fashioned UK inflation shock," said David Tinsley of BNP Paribas. "If it persists in coming months it can only intensify the debate on the MPC."
Fed's Yellen speaks, US data
Federal Reserve Chair Janet Yellen has signalled that interest rates will remain low since the US economic recovery is "not yet complete" and too many Americans remain unemployed.
Capital Economics said: "[...]Yellen appears in no rush to begin normalising interest rates, even though the pace of employment growth has accelerated and the unemployment rate has fallen to 6.1%. We're not so sure. Survey measures showing that jobs are increasingly hard to fill, which indicates to us that the decline in the unemployment rate does reflect a genuine dwindling of the spare capacity in the labour market."
Elsewhere in the US, data showed manufacturing in the New York region grew in July. The Federal Reserve Bank of New York's general economic index climbed to 25.60 from 19.28 in June, beating the forecast for a drop to 17.
Another report showed US retail sales rose by just 0.2% in June, below the consensus forecast of 0.6%. However, sales in both April and May were revised to show stronger growth.
Tobacco stocks slide
Tobacco rivals Imperial and British American dropped as investors gave a cool reaction to the planned merger between US peers Reynolds and Lorillard, which involves both UK companies parting ways with a lot of cash.
UK housing stocks Barratt Developments and Persimmon were also trading in negative territory after a bigger-than-expected jump in inflation sparked concerns that the BoE will move quickly to hike interest rates.
A small rise in the prices of gold and silver helped precious metal miners Fresnillo, African Barrick Gold and Randgold rally.
Strong customer growth in the first quarter at Telecom Plus led to increasing confidence that the utility supplier will hit full-year profits expectations of 50% growth. Shares in the FTSE 250 company surged after it said it expected to gain increasing customers in the coming months due to regulatory changes in the energy industry.
Airline stocks including easyJet and International Consolidated Airlines were higher amid deal activity at the Farnborough Air Show in southern England.
FTSE 100 - Risers
easyJet (EZJ) 1,277.00p +2.65%
Royal Bank of Scotland Group (RBS) 327.30p +2.44%
Coca-Cola HBC AG (CDI) (CCH) 1,391.00p +1.46%
International Consolidated Airlines Group SA (CDI) (IAG) 332.80p +1.37%
Royal Mail (RMG) 488.70p +1.18%
Vodafone Group (VOD) 194.00p +0.99%
United Utilities Group (UU.) 885.00p +0.97%
Anglo American (AAL) 1,514.00p +0.83%
3i Group (III) 388.10p +0.78%
Centrica (CNA) 308.80p +0.75%
FTSE 100 - Fallers
Imperial Tobacco Group (IMT) 2,638.00p -3.69%
Sports Direct International (SPD) 704.50p -2.56%
Barratt Developments (BDEV) 360.30p -2.17%
Schroders (SDR) 2,480.00p -2.09%
ARM Holdings (ARM) 833.50p -1.94%
Marks & Spencer Group (MKS) 427.10p -1.91%
Ashtead Group (AHT) 879.50p -1.84%
Burberry Group (BRBY) 1,412.00p -1.81%
Associated British Foods (ABF) 2,897.00p -1.80%
British American Tobacco (BATS) 3,532.00p -1.77%
FTSE 250 - Risers
Telecom Plus (TEP) 1,338.00p +8.08%
Intermediate Capital Group (ICP) 400.80p +6.06%
William Hill (WMH) 348.00p +3.11%
Domino's Pizza Group (DOM) 532.50p +2.90%
African Barrick Gold (ABG) 232.20p +2.47%
Michael Page International (MPI) 438.00p +2.36%
Balfour Beatty (BBY) 226.70p +1.80%
Monks Inv Trust (MNKS) 377.00p +1.62%
Daejan Holdings (DJAN) 4,825.00p +1.54%
Grainger (GRI) 218.70p +1.53%
FTSE 250 - Fallers
Millennium & Copthorne Hotels (MLC) 570.00p -4.12%
Fenner (FENR) 342.80p -3.98%
Redrow (RDW) 242.30p -3.66%
Elementis (ELM) 254.40p -3.53%
Poundland Group (PLND) 312.60p -3.52%
Fidessa Group (FDSA) 2,112.00p -3.47%
Pets at Home Group (PETS) 178.00p -3.26%
Merlin Entertainments (MERL) 342.50p -3.25%
Enterprise Inns (ETI) 116.00p -3.01%
Hikma Pharmaceuticals (HIK) 1,682.00p -3.00%
FTSE TechMARK - Risers
Optos (OPTS) 182.25p +3.70%
Consort Medical (CSRT) 968.00p +1.68%
Gresham Computing (GHT) 127.50p +1.49%
E2V Technologies (E2V) 160.00p +1.43%
KCOM Group (KCOM) 95.25p +1.33%
RM (RM.) 168.00p +1.20%
Ricardo (RCDO) 642.00p +0.94%
NCC Group (NCC) 194.50p +0.52%
Wolfson Microelectronics (WLF) 231.75p +0.22%
Gov Bond 7-10YR UCITS ETF (IEGM) € 191.69 +0.07%
FTSE TechMARK - Fallers
Torotrak (TRK) 19.25p -2.53%
SDL (SDL) 342.00p -2.43%
Oxford Biomedica (OXB) 2.83p -1.74%
Sarossa (SARS) 1.82p -1.35%
Kofax Limited (DI) (KFX) 410.00p -1.32%
Anite (AIE) 90.00p -0.83%
Promethean World (PRW) 30.75p -0.81%
Innovation Group (TIG) 32.75p -0.76%
CML Microsystems (CML) 360.00p -0.69%
Microgen (MCGN) 125.00p -0.40%