FTSE 100 close: London pares gains as BP slump offsets inflation hope

London’s FTSE markets pared their gains at the close on Tuesday after a share slump for oil giant BP driven by a poor set of results dragged on a boost from falling food inflation.

The blue-chip FTSE 100 index closed 0.2 per cent lower at 7,314.80 while the midcap FTSE 250, which is more aligned with the health of the domestic economy, climbed 0.4 per cent to 17,080.92.

Despite a three-day streak of gains, the FTSE 250 has recorded its worst month since last September.

Markets in London were given a boost this morning after inflationary pressures eased again. According to the latest reading from the British Retail Consortium (BRC), food inflation came in at 8.8 per cent in October, down from 9.9 per cent in September. 

Soaring food prices have been on a downward trajectory over the past few months in a signal that the worst of the cost of living pressures are beginning to ease. 

“Groceries are still getting more expensive, but more slowly, which is taking the edge off the panic shoppers have been feeling at the tills,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“This is also more palatable for Bank of England policymakers, who will decide about the direction of interest rates on Thursday. Expectations are rising that the pause button on interest rates will be hit again, helped by oil prices largely cementing yesterday’s losses.”

BP, the fifth largest stock on the FTSE 100 by market cap, fell more than five per cent despite announcing another round of buybacks.

Weak gas results offset strong oil trading meaning the oil giant recorded third quarter profit of $3.3bn, lower than analysts had expected.

“While the company appears to be continuing its so called ‘Performing while Transforming’ strategy, there appears to be an increasing concern that the current strategy is neither transforming nor performing at a time when its US peers Chevron and Exxon are pulling ahead, and its UK counterpart Shell’s shares recently hit new record highs,” said CMC analyst Michael Hewson.

“Hopefully, a new CEO can help resolve what appears to be the uncertainty at the top of the business.”

Shell, the FTSE 100’s biggest stock by market cap, also fell around 1.8 per cent.

Rolls Royce climbed to the top of the index after Barclays upgraded the firm’s rating from equal weight to overweight. Its shares were up 6.4 per cent.

Other winners on the FTSE 100 included chemicals firm Croda International, property developer Segro and retailer Kingfisher.

Losers included energy giant Glencore, InterContinental Hotels and miner Antofagasta.

On the FTSE 250, IG Group rose over three per cent after announcing plans to axe around 300 members of staff.