London has opened lower ahead of this morning's inflation figures, with tensions in China putting investors in a cautious frame of mind.

There are signs that US President Barack Obama may be keen to pick a fight with China over US jobs. Obama launched action at the World Trade Organisation (WTO) to stop Chinese auto industry aid from threatening jobs in the key electoral battleground state of Ohio. China responded with its own WTO action against the US.

Relations between China and Japan are also going through a rough patch, as a territorial dispute has flared up over a group of islands known as Senkaku in Japan and Diaoyu in China. Anti-Japanese protests have been taking place in Japan for a number of days but escalated today on the anniversary of an infamous incident in Manchuria in 1931, when the Japanese blew up a railway in Manchuria, blaming it on dissidents, as a pretext for an invasion of north-east China.

As for Chinese economic data, that has also attracted the attention of the bears, as Chinese house prices rose in fewer cities in August (35 of 70) than they did in the month before (49 of 70).

Closer to home, Spanish bond yields are still being closely watched for any signs of a rebound. The European Central Bank´s Luc Coene has been cited as saying that they may still force the country to ask for help. Spanish loan default data is expected to be released later in the morning (along with the results of the Spanish Treasury´s latest note auction results).

In Blighty, the consensus expectation is for consumer price inflation to ease to 2.5% year-on-year from 2.6% and for prices - as measured by the retail price index - to fall to 3.1% year-on-year from 3.2% (consensus 3.0%).

Building something big

House-building and construction firm Galliford Try saw profits soar last year, paving the way for its full-year dividend pay-out to almost double. Group revenue in the year ended June 30th rose 17% to £1,504m from £1,284m the year before. Profit before tax surged 80% to £63.1m from £35.1m the previous year, while earnings per share jumped 89% to 60.9p from 32.2p last year. The divi rose in line with earnings, from 16p to 30p.

The Kentz engineering and construction group has been awarded a shut-down services and operations support contract with Exxon Neftegas within the Sakhalin 1 development project in Far East Russia. The contract is valued at around $50m.

Mixed fortunes on the High Street

Department store group Debenhams saw like-for-like (LFL) sales rise 3.7% in the final 10 weeks of its financial year, which ran to September 1st. For the full-year, LFL sales were up 1.6%.

Elsewhere on the high street, sports fashionwear firm JD Sports is having a few teething problems with the integration of the Black's Leisure store portfolio it acquired a while back. The firm said Blacks had made an initial loss of £10m, as expected, due to a critical lack of stock and unsustainable cost base.

Broker downgrades have put insurance titan Aviva on the skids, pushing the stock's dividend yield beyond seven per cent; BofA Merrill Lynch has downgraded Aviva to 'underperform', although the target price has been raised to 360p from 330p, while Deutsche bank has moved to a 'hold' recommendation and edged up the target price from 360p to 375p.

Electrical, digital and optical connections provider Volex said it expects revenue and profit for the year ending 31st March 2013 to fall short of previous company expectations after an unexpected change in demand from its largest customer in the consumer sector.

Imperial Tobacco and British American Tobacco are doing well after Nomura lifted its price targets on both this morning. Berenberg has initiated coverage of Unilever at buy.

FTSE 100 - Risers
Unilever (ULVR) 2,298.00p +1.32%
Diageo (DGE) 1,702.00p +1.10%
Imperial Tobacco Group (IMT) 2,336.00p +0.78%
Morrison (Wm) Supermarkets (MRW) 295.40p +0.72%
British American Tobacco (BATS) 3,176.50p +0.71%
Tate & Lyle (TATE) 652.00p +0.62%
Bunzl (BNZL) 1,093.00p +0.46%
United Utilities Group (UU.) 691.50p +0.44%
GlaxoSmithKline (GSK) 1,438.50p +0.42%
Smith & Nephew (SN.) 688.50p +0.36%

FTSE 100 - Fallers
Aviva (AV.) 343.70p -4.32%
Eurasian Natural Resources Corp. (ENRC) 348.40p -3.92%
Royal Bank of Scotland Group (RBS) 264.30p -3.68%
Kazakhmys (KAZ) 733.00p -3.62%
Vedanta Resources (VED) 1,054.00p -3.57%
Rio Tinto (RIO) 3,112.50p -3.22%
Barclays (BARC) 220.85p -3.14%
GKN (GKN) 229.50p -3.12%
Evraz (EVR) 275.20p -3.10%
Antofagasta (ANTO) 1,274.00p -2.60%

FTSE 250 - Risers
Domino Printing Sciences (DNO) 575.00p +2.22%
Rathbone Brothers (RAT) 1,359.00p +2.18%
Galliford Try (GFRD) 685.50p +2.01%
Carpetright (CPR) 670.00p +1.67%
Devro (DVO) 328.00p +1.08%
NMC Health (NMC) 196.70p +0.87%
Dechra Pharmaceuticals (DPH) 573.50p +0.79%
Mitchells & Butlers (MAB) 289.00p +0.77%
Kier Group (KIE) 1,376.00p +0.73%
F&C Commercial Property Trust Ltd. (FCPT) 104.20p +0.68%

FTSE 250 - Fallers
Ocado Group (OCDO) 69.00p -6.25%
Ferrexpo (FXPO) 213.60p -4.77%
Lonmin (LMI) 622.00p -4.16%
Petropavlovsk (POG) 430.50p -3.78%
Homeserve (HSV) 232.80p -3.56%
Laird (LRD) 236.10p -3.20%
Raven Russia Ltd (RUS) 66.85p -3.12%
Renishaw (RSW) 1,600.00p -2.85%
Avocet Mining (AVM) 92.35p -2.79%
Brewin Dolphin Holdings (BRW) 161.90p -2.70%


JH

Related share prices
British American Tobacco (BATS) share price
Aviva (AV.) share price
Imperial Tobacco Group (IMT) share price
Galliford Try (GFRD) share price
JD Sports Fashion (JD.) share price
Volex (VLX) share price
Debenhams (DEB) share price
Kentz Corporation Ltd. (KENZ) share price