FTSE hangs as inflation jumps

The FTSE 100 fell to below 6150 on news inflation had jumped to three per cent – before making up losses to finish above the 6200 mark.

At close of play the FTSE 100 stood at 6211.90, up 0.14 per cent, after a day yo-yoing – first gaining on rises in New York and Asia, then falling on the consumer prices index rising half a percentage point to three per cent, then clawing back losses.

Banking stocks also took a hit today with Alliance & Leicester – down 10.14 per cent – on news of a £391 million writedown.

Bradford & Bingley, HBOS and Barclays - which is releasing a trading statement on Thursday - also saw their share prices fall.

Ryan Kneale, market analyst at City bookmaker BetsForTraders.com, said: "After a promising start this morning, we have since seen weak UK housing data, rising inflation and more write-downs from UK bank Alliance & Leicester.

"After today you would be forgiven for thinking we were already well on the way to a recession and it is showing with some steep individual losses."

He added: "We have also seen oil prices slip a little today which has logically brought the price of oil stocks down. The continued rise in oil stocks over the last few weeks has been the main reason behind the major indices gaining and it is only now you get a sense of how fragile the rest of the equity markets really are."

Also today Miner Rio Tinto rose on speculation it would increase its bid for rival BHP Billiton. Its share price rose 3.39 per cent to 6626p.

Fellow miner Eurasian Natural Resources also saw its share price rise – up 3.07 per cent to 1377p – on news is was pulling out of bidding for rival mining company Kazakhmys.

Daniel Barnes