Stocks gain in London as global markets boosted by softer US inflation

The FTSE rebounded on Tuesday as global traders cheered positive US inflation data.

US Consumer Price Index (CPI) figures revealed inflation of 7.1% in November, amid declining gasoline prices, below the 7.3% expected for the month.

The reading helped boost recent hopes that aggressive interest rate hiking could soften quickly in the US and other key areas.

The FTSE 100 finished the day up 56.92 points, or 0.76%, at 7,502.89.

Joshua Mahoney, senior market analyst at IG, said: “Global markets have received a welcome boost today, as the latest US inflation survey brought downside in both headline and core CPI readings in November.

“The fact that we have seen a relatively widespread decline in inflation that is not solely reliant on the volatile energy prices does provide greater confidence for the bulls, with house rents providing the one aspect which is yet to reverse.”

Michael Hewson, chief market analyst at CMC Markets UK, added: “Today’s gains have been wide ranging with online retail companies helping to lead the gains, with Ocado rising to four-week highs, and Zalando in Germany rising to six-month highs.”

Elsewhere in Europe, the data was also welcomed, helping to drive the German Dax to its highest level in around six months.

The Dax improved 1.34% by the end of the session and the French Cac finished 1.42% higher.

On Wall Street, the inflation figures helped the main markets surge and dragged the dollar lower.

Sterling was another beneficiary of weakness in the dollar, helping to offset any impact from an increase in the UK unemployment rate in the three months to October.

The pound was up 0.95% against the dollar at 1.237, but was flat against the euro at 1.163 at the close.

In company news, Capita saw shares shoot higher as revenues at the outsourcing firm were lifted by its contract with the Royal Navy, with debts slimmed as it shed an area of the business.

The firm reported 2% adjusted group revenue growth in the 11 months to November 30 in its pre-close trading update to investors.

Shares climbed 2.02p higher to 25p at the close as a result.

Elsewhere, Rolls-Royce dipped in value after the engineering giant was placed on negative catalyst watch by JP Morgan, ahead of the start of new chief executive Tufan Erginbilgic.

It saw shares finish 2.23p lower at 90.61p.

FTSE 250 airline group EasyJet also finished the session lower after a pair of downgrades.

The budget airliner was cut by Oddo BHF to “underperform” from “neutral”, and cut by Deutsche Bank to “sell” from “hold” amid concerns over higher costs and continued pressure on consumers. Shares dipped by 10p to 369.8p.

The price of oil continued to bounce back as it was lifted higher by the weak dollar despite OPEC cutting its guidance for the fourth quarter of 2022.

Brent crude oil increased by 3.86% to 80.96 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were Intermediate Capital Group, up 66p at 1,235p, Ocado, up 30.6p at 700p, Antofagasta, up 58p at 1,483p, Ashtead, up 186p at 5,056p, and Prudential, up 39p at 1,100p.

The biggest fallers of the day were Rolls-Royce, down 2.23p at 90.61p, Imperial, down 41p at 2,020p, Centrica, down 1.7p at 90.52p, BAT, down 55p at 3,252.5p, and Pearson, down 13.8p at 913.2p.