London midday: Stocks pare gains as early China boost fades

(Sharecast News) - London stocks had pared gains by midday on Tuesday, as an early boost on the back of Chinese growth hopes faded. The FTSE 100 was up just 0.1% at 7,457.69. The index had been higher earlier, with miners pacing the gains after Chinese Premier Li Qiang said the country was still on track to reach its annual growth target of around 5%.

Li said growth in the second quarter was expected to be faster than in the first.

On home shores, figures released earlier by the British Retail Consortium and NielsenIQ showed that shop price inflation nudged down to 8.4% in June from 9.0% in May, with food inflation easing to 14.6% from 15.4%, coming in below the three-month average of 15.2% and marking the second consecutive deceleration in the food category.

Fresh food inflation also slowed further in June, to 15.7% from 17.2%. Ambient food inflation eased to 13.0% from 13.1%, and non-food inflation ticked down to 5.4% from 5.8%.

BRC chief executive Helen Dickinson said: "Households up and down the country will welcome the easing of shop price inflation in June. Food inflation slowed for the second consecutive month, particularly for fresh products, as retailers cut the price of many staples including milk, cheese and eggs. Clothing and electrical goods also saw falling prices, helping customers to pick up a bargain ahead of the summer holidays.

"If the current situation continues, food inflation should drop to single digits later this year. However, it is imperative that government does not hamper this progress by introducing costly new policies."

In equity markets, Asia-focused Prudential and Standard Chartered both rallied.

Informa was boosted by a re-initiation of coverage at 'buy' by Berenberg.

Telecom Plus - which trades as Utility Warehouse - surged as it hailed record full-year profits, revenue and customer growth and hiked its dividend.

On the downside, shares in sportswear retailer JD Sports Fashion slid as the company warned of softening in its North American markets and a slowdown overall in May, but maintained annual guidance.

PZ Cussons also fell sharply after the Imperial Leather maker said it expected to take a hit from the recent devaluation of the Nigerian naira, but would report higher annual sales and profits.

BT Group was hit by a downgrade to 'sell' from 'neutral' at UBS, which said it was assuming a halving of the dividend amid free cash flow pressures.

"We think the market has underestimated the impact of rising interest rates and accounting changes at BT Sport that impacts free cash flow," the bank said.

"Without a dividend cut, BT Group will have to borrow more than £900m per annum over the next three years.

"Borrowing to fund both the dividend and pension deficit payments when the cost of debt is rising presents risks and we assume a halving of the dividend to 3.85p (from 7.7p)."

Market Movers

FTSE 100 (UKX) 7,457.69 0.06% FTSE 250 (MCX) 17,997.84 0.13% techMARK (TASX) 4,436.87 -0.22%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 590.00p 2.25% Vodafone Group (VOD) 71.51p 2.07% Prudential (PRU) 1,098.50p 2.04% Ocado Group (OCDO) 539.00p 1.58% Informa (INF) 711.40p 1.57% Standard Chartered (STAN) 666.60p 1.31% Burberry Group (BRBY) 2,154.00p 1.13% Lloyds Banking Group (LLOY) 42.43p 1.12% Unite Group (UTG) 863.50p 1.11% United Utilities Group (UU.) 1,004.00p 1.07%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 138.75p -5.35% BT Group (BT.A) 122.50p -4.03% Persimmon (PSN) 1,042.00p -1.88% Halma (HLMA) 2,215.00p -1.77% Admiral Group (ADM) 2,128.00p -1.21% IMI (IMI) 1,571.00p -1.19% Fresnillo (FRES) 606.20p -0.88% Spirax-Sarco Engineering (SPX) 10,045.00p -0.84% Imperial Brands (IMB) 1,752.00p -0.74% Croda International (CRDA) 5,540.00p -0.72%

FTSE 250 - Risers

Telecom Plus (TEP) 1,602.00p 6.09% Carnival (CCL) 1,023.50p 5.00% Molten Ventures (GROW) 240.80p 3.61% Trainline (TRN) 235.00p 2.89% Supermarket Income Reit (SUPR) 73.80p 2.79% Tritax Eurobox (GBP) (EBOX) 51.90p 2.17% Lancashire Holdings Limited (LRE) 553.50p 2.12% W.A.G Payment Solutions (WPS) 89.80p 2.05% Bank of Georgia Group (BGEO) 3,090.00p 1.98% Clarkson (CKN) 2,890.00p 1.76%

FTSE 250 - Fallers

PZ Cussons (PZC) 163.80p -6.40% Aston Martin Lagonda Global Holdings (AML) 346.60p -4.36% Ferrexpo (FXPO) 88.30p -3.34% Darktrace (DARK) 314.60p -2.78% 4Imprint Group (FOUR) 4,820.00p -2.43% Harbour Energy (HBR) 219.80p -2.40% Energean (ENOG) 1,008.00p -1.95% Capita (CPI) 27.40p -1.86% Allianz Technology Trust (ATT) 251.00p -1.76% Moneysupermarket.com Group (MONY) 262.80p -1.57%