LONDON MARKETS: FTSE 100 Fights For Firm Direction As Inflation Hits Highest In Almost 6 Years

Oil producer shares rise on pipeline leak, but supermarkets pull back

U.K. blue-chip stocks on Tuesday struggled around two-week highs, as shares of oil producers were pulled higher by a rise in crude prices, but some supermarket shares were dragged down by new industry sales figures.

All the moves come ahead of the release of British consumer price data for November, due later in the session. The inflation reading is key to policy decisions by the Bank of England, which will send out an update on its interest rate stance on Thursday.

How markets are moving: The FTSE 100 index was up 0.1% at 7,458.75 but has been dipping into negative territory. Oil and gas, tech and utility shares rose, but the consumer services, financial and basic materials groups declined.

On Monday, the London benchmark rose 0.8% (http://www.marketwatch.com/story/ftse-100-leads-the-way-in-europe-driven-higher-by-softer-pound-2017-12-11) to close at its highest level since Nov. 28, according to FactSet data.

The pound bought $1.3362, up from $1.3339 on late Monday in New York. handle. Strength in sterling typically weighs on exporters listed on the FTSE 100, as it hurts the value of overseas revenue.

In fixed-income markets, the 10-year gilt yield was up 1 basis points to 1.216%, according to Tradeweb. Yields rise when prices fall.

What's moving markets: Shares of oil producers rose as crude and Brent futures extended the gains they logged on Monday, after news that a major North Sea oil pipeline, The Forties, will be shut down for weeks to repair a leak.

While the outage is a significant supply disruption -- the pipeline carries supplies from more than 80 major fields -- it has a wider impact in that the Forties's flows feed into a key price benchmark for global oil.

On Tuesday, February Brent crude jumped more than 1% (http://www.marketwatch.com/story/brent-oil-rises-to-fresh-212-year-high-as-north-sea-pipeline-outage-reverberates-2017-12-12) to trade around its highest level since mid-2015. Later, a weekly update on U.S. oil stockpiles will be released by the American Petroleum Institute after the close of European trade.

Meanwhile, the pound was rising again on Tuesday. Strength in sterling typically weighs on exporters listed on the FTSE 100, as it hurts the value of overseas revenue.

Oil movers: Shares of BP PLC (BP.LN) (BP.LN) climbed 1.1%, and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) was up 0.9% as oil prices were carried higher.

Inflation data: U.K. inflation has hit its highest level since March 2012, boosted by higher air fares, the Office for National Statistics reported. The consumer price index grew 3.1% in the 12 months to November. Analysts had expected the CPI to hold at 3%, according to a FactSet survey.

The inflation reading is more than a full percentage point above the Bank of England's target. The U.K. central bank will release its next policy decision on Thursday, but no changes are expected. Policy makers led by Mark Carney in November raised the benchmark interest rate for the first time in a decade, by a quarter percentage point to 0.5%.

Supermarket sweep: Kantar Worldpanel said Tuesday that sales for the top four U.K. grocers grew in the 12 weeks ended December, but each lost market share (http://www.marketwatch.com/story/top-4-uk-supermarkets-lift-sales-but-lose-share-2017-12-12).

Wm Morrison Supermarkets (MRW.LN) fell 2.6% and J Sainsbury (SBRY.LN) was down 2.3% while rival Tesco PLC (TSCO.LN) was up 0.1%.

Stock movers: Ashtead PLC (AHT.LN) surged 3.5% as the equipment-rental company said it will start a share buyback program of up to GBP1 billion (http://www.marketwatch.com/story/ashtead-to-buy-back-up-to-1-billion-in-shares-2017-12-12) ($1.33 billion) and that fiscal 2018 results should come in above expectations.

(END) Dow Jones Newswires

December 12, 2017 04:48 ET (09:48 GMT)