By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks finished higher Tuesday,
with consumer-related shares propping up the benchmark FTSE 100 in
the wake of reports indicating inflation tapering.
The FTSE 100 rose 0.6% to 6,898.13. The index had been lower
earlier in the session after a collapse in talks between Greece and
eurozone finance ministers late Monday reignited fears about the
eurozone, the U.K.'s biggest trading partner.
But consumer stocks got a lift following the Office for National
Statistics's report that showed annual consumer-price inflation in
January slowed to 0.3%, the lowest annual rate since March 1960.
Inflation has cooled as prices for food and gasoline have
declined.
Smirnoff vodka and Crown Royal whiskey maker Diageo PLC and
Imperial Tobacco PLC topped the benchmark as their shares rose 2.5%
and 2.2%, respectively. British American Tobacco PLC gained 1.5% as
did consumer-products heavyweight Unilever PLC .
The "good news" for most consumer-spending centered companies
stemming from the inflation report "is that consumers should go out
and make purchases. The bad news is that it could hit their bottom
lines if they are going to have to start cutting prices or there's
some sort of price war on the high street," said Kathleen Brooks,
research director at Forex.com.
Labor-market readings for December will be released on
Wednesday, "and if we get another good reading on the jobs front
that wages will pick up quite dramatically this year....then that's
going to be fantastic news for our beleaguered High Street," Brooks
said. Average weekly earnings excluding bonuses are expected, on
average, to rise 1.8%, according to a FactSet consensus
projection.
The pound (GBPUSD) fell to $1.5345 after the inflation report,
from $1.5364 late Monday.
Back on the FTSE 100, decliners included InterContinental Hotels
Group PLC as its shares fell 1.7%. The company, whose brands
include Crowne Plaza and Holiday Inn Hotels & Resorts, said
full-year 2014 revenue fell to $1.86 billion, from $1.90 billion a
year ago. IHG did raise its total dividend by 10%, to 77 cents a
share.
Shares of Standard Chartered PLC shed 0.5% after the bank was
downgraded to buy from hold at Investec.
"We continue to believe that [Standard Chartered] has no need to
raise capital, and that it would be ill-advised to do so, but we
feel like we're losing that argument," said Investec's Ian Gordon
in a note. "If management, old or new, has the courage to face down
its critics, and deliver credible reassurance that it will not
raise capital, we think the shares could recover strongly, but
that's now an 'if'," Gordon added.
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