Industrials rally lifts FTSE 100 but inflation jitters linger

A rally among industrial stocks lifted London’s FTSE 100 this morning, but concerns about stickier than expected inflation tempered gains on the capital’s markets.

The FTSE 100 added 0.78 per cent to rise above the 7,000 threshold in the opening session.

Market sentiment has been stung by concerns the UK economy is headed for a nasty bout of low growth and soaring prices.

UK natural gas month-ahead prices rose to all-time highs yesterday, while house prices increased at their fastest monthly rate since 2007. Oil prices have pulled back from seven-year highs, triggered by natural gas looking more attractive to traders as prices fell this morning.

Russ Mould, investment director at AJ Bell, said: “Some of the heat was taken out of the gas market after an intervention by Russian premier Vladimir Putin yesterday, cooling inflationary fears for the time being.”

“However, even if energy prices fall from here, they’ve gone up so much in recent weeks that they will still have a large impact on inflation numbers in the coming months. So, while the FTSE 100 was making solid progress on Thursday morning, further volatility cannot be ruled out.”

Miners Anglo American, Antofagasta and Rio Tinto were all up more than two per cent this morning.

The mid-cap FTSE 250 was boosted by financials and travel stocks.

The pound was largely flat against the dollar at $1.3582 and yields on British gilts stood at 1.07 per cent.

The robust start to trading in London was extended into the continent – Germany’s Dax 30 gained 1.15 per cent and the pan-European Stoxx 600 rose 1.03 per cent.

Asian shares rallied in overnight trading. Hong Kong’s Hang Seng was the best performer, climbing 3.07 per cent.

More to follow.