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Jan. 15, 2020, 7:23 a.m. EST

London stocks inch up after inflation data and more Bank of England rate-cut talk

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By Barbara Kollmeyer, MarketWatch


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U.K. stocks inched up on Wednesday as investors weighed up weak consumer prices, while the British pound wobbled on more dovish talk on interest rates by a Bank of England member.

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +1.46%  inched up 0.1% to 7,630.10, which would make for the third-straight winning session, though gains for the week so far are only sitting at 0.5%. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0468%  pulled back from earlier losses to trade flat at $1.3011.

Against a backdrop of sluggish growth in the U.K. and an outlook for subdued growth, an expansionary monetary stance and possible further interest rate cuts would be appropriate, said Bank of England Monetary Policy Committee member Michael Saunders in prepared remarks for a speech in Northern Ireland on Wednesday.

He follows two other members who have recently voiced support for a dovish stance on policy. The next Bank of England Monetary Policy Committee meeting will take place on January 30.

Meanwhile, data showed the annual rate of U.K. consumer price inflation fell to 1.3% in December, from 1.5% the prior month, which was below a consensus for stable inflation from analysts polled by The Wall Street Journal.

But Friday’s U.K. retail sales data and next week’s purchasing managers index data will give an even clearer idea on how the economy has been performing, said Bethel Loh, macro strategist at ThinkMarkets.

U.K. markets struggled alongside European markets while investors fretted over possible renewed trade tensions between the U.S. and China as the signing of a partial trade deal between the countries is expected later on Wednesday.

Among active stocks, shares of Persimmon /zigman2/quotes/206444744/delayed UK:PSN +3.61%  rose 1% after the U.K. house builder said it expects profit to be in line with market expectations. The company also said it was making good progress on improving quality and customer care after an independent review criticized it over “poor workmanship.”

“We remain bullish on the name given the group’s strong balance sheet, well covered yield and robust fundamentals in the low-end of the pricing market where Persimmon operates,” said David O’Brien, analyst at Goodbody.

Banks were under some pressure, with Royal Bank of Scotland (RBS)   dropping 2.5%. The bank was downgraded by analysts at Barclays on Tuesday to underweight, alongside AIB Group /zigman2/quotes/208990455/delayed IE:A5G +7.40% .

“For RBS we expect the restructuring of NatWest Markets and Ulster to be expensive, with long-dated capital return and NIM [net interest margin] headwinds likely stronger than expected,” said Barclays.

Shares of Standard Chartered /zigman2/quotes/200125072/delayed UK:STAN +7.48%  and Barclays /zigman2/quotes/206581728/composite BCS +6.17%   /zigman2/quotes/208409333/delayed UK:BARC +7.05%  were also down, just over 1% each.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
5,927.93
+85.26 +1.46%
Volume: 899,878
Sept. 28, 2020 4:59p
loading...
/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2840
+0.0006 +0.0468%
Volume: 0.0000
Sept. 28, 2020 5:03p
loading...
/zigman2/quotes/206444744/delayed
UK : U.K.: London
2,498.00 p
+87.00 +3.61%
Volume: 1.05M
Sept. 28, 2020 4:35p
P/E Ratio
11.80
Dividend Yield
1.60%
Market Cap
£7.68 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/208990455/delayed
IE : Ireland: Dublin
0.93
+0.06 +7.40%
Volume: 4.56M
Sept. 28, 2020 4:30p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
€2.35 billion
Rev. per Employee
€324,484
loading...
/zigman2/quotes/200125072/delayed
UK : U.K.: London
362.00 p
+25.20 +7.48%
Volume: 7.05M
Sept. 28, 2020 4:35p
P/E Ratio
10.30
Dividend Yield
0.00%
Market Cap
£10.60 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/206581728/composite
US : U.S.: NYSE
$ 4.99
+0.29 +6.17%
Volume: 3.49M
Sept. 28, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
2.89%
Market Cap
$20.17 billion
Rev. per Employee
$458,292
loading...
/zigman2/quotes/208409333/delayed
UK : U.K.: London
98.00 p
+6.45 +7.05%
Volume: 47.61M
Sept. 28, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£15.87 billion
Rev. per Employee
N/A
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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