16th Jan 2014 12:29
(Correcting US CPI forecasts).
LONDON (Alliance News) - UK stocks are trading mixed Thursday, with the mining sector outperforming after a positive production update from sector giant Rio Tinto. Meanwhile, eurozone inflation has slowed slightly, in line with expectations.
By mid-morning Thursday, the FTSE 100 is down 0.1% at 6,817.11, and the FTSE 250 is down 0.4% at 16,231.43. But the AIM All-Share is up 0.1% at 885.07.
The final reading of eurozone CPI has been released and is unchanged, showing consumer prices in the single currency block rising at 0.8% year-on-year in December, a slight slowdown from the 0.9% rise seen in November. On a monthly basis, prices rose by 0.3% in December, up from a negative 0.1% reading in November. The numbers were in line with economist expectations.
"Core inflation is at a record low for the euro zone since it came into being 15 years ago, but today?s dip will worry the European Central Bank, with the prospect of further falls across the continent looming large," said UFXMarkets managing director Dennis de Jong.
The numbers come after final CPI numbers from Germany earlier in the morning showed prices rising at 0.4% month-on-month and 1.4% year-on-year in December, also in line with expectations.
"There is no doubt that prices are falling in some parts of the euro area, but that is an unavoidable side-effect of internal devaluation and adjustments as countries undergo structural reform programs. Given that unit labour costs in France and Italy are still rising relative to Germany we could well see more deflation," said CMC Markets chief analyst Michael Hewson.
European equity markets are also struggling after posting record gains on Wednesday. The CAC40 is down 0.2% and the DAX is down 0.1%.
Within UK equities, the mining sector has received a boost in the form of a production update from Rio Tinto. The major Anglo-Australian miner said it produced 70.4 million tonnes of iron ore in its fourth quarter ending December 31, 2013, a 6% increase on the same quarter the previous year, while full-year 2013 iron ore production increased 5% from the previous year to 266.0 million tonnes.
The FTSE 350 mining sector is consequently the biggest gainer Thursday, up 2.7%. Rio Tinto shares are up 2.8%. Anglo American is also performing well, up 2.9% following Wednesday's upgrade to Buy from UBS. BHP Billiton shares are up 3.5% after being upgraded to Buy by Citigroup Thursday.
Dragging on the other end of the FTSE 100, Associated British Foods have disappointed the market with a trading update warning on sugar pricing. The stock leads the blue chip fallers, down 4.5%.
Aberdeen Asset Management has also released a negative Interim statement that showed assets under management falling faster than expected. The asset manager said clients withdrew GBP4.4 billion in the first-quarter, as investors turned against Asian and emerging markets. The stock is down 2.8%.
The economic focus shifts to the US this afternoon with the release of US CPI at 1330 GMT. Economists expect consumer prices to have risen by 0.3% month-on-month, up from a flat reading in November. On a yearly basis, prices are expected to be rising at 1.5%, slightly faster than the 1.2% seen in November. Due at the same time, initial jobless claims are expected to have reduced slightly to 328,000 for the week ended January 10 from 330,000 previously.
Furthermore, there are speeches to come Ben Bernanke and San Francisco Fed President John Williams, as well Treasury Secretary Jack Lew.
By Jon Darby; [email protected]; @jondarby100
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