LONDON MARKETS: FTSE 100 Scrabbles To Hold Onto Record, As BP Falls

Inflation comes in at 3% as expected

Blue-chip stocks edged lower Tuesday, pulled lower by a fall in shares of BP PLC after the energy heavyweight said it will take a $1.7 billion charge related to the Deepwater Horizon disaster.

Traders were focused an update on U.K. inflation, expected to show a slight slowdown.

How markets are moving: The FTSE 100 index slipped 2 points to 7,767.55, with the oil and gas, and basic materials sectors in the red. But the consumer goods group led the sector advancers.

The London benchmark was still near the all-time closing high of 7,778.64, hit last week. On Monday, the index fell 0.1% (http://www.marketwatch.com/story/ftse-100-steps-back-from-record-with-carillion-collapse-in-focus-2018-01-15).

The pound traded at $1.3767, slipping from $1.3782 ahead of the release of inflation data. Sterling was at $1.3794 late Monday in New York, after breaking above $1.38 earlier in that session.

What's driving markets: The London benchmark wobbled in early trading, with the decline for BP shares and the drop in pound pulling in different directions.

A fall for BP shares was keeping the index in check after the energy giant said it expects to book a $1.7 billion charge (http://www.marketwatch.com/story/bp-to-book-17-billion-deepwater-horizon-charge-2018-01-16-34853027) in its 2017 fourth-quarter results for claims related to the 2010 Deepwater Horizon oil spill. The company has already said it is likely to take a $1.5 billion accounting charge related to U.S. tax reform. BP shares have a weighting of 5.1% on the FTSE 100, the fourth-highest of any individual company, according to FactSet data.

Economic data: U.K. inflation came in at 3% in December, the Office for National Statistics reported, meeting a consensus estimate from FactSet. The rate compares with a reading of 3.1% in November.

Average house prices in the U.K. rose 5.1% in November, the ONS said.

What strategists are saying: "The [inflation] data is unlikely to greatly sway the Bank of England MPC's current views, although it is sure to be monitoring the current [pound] rally, continuing to erode the Brexit inflation of the last 18 months" said Mike van Dulken and Henry Croft at Accendo Markets.

"More of this could see the U.K. central bank in a position to hike interest rates sooner than markets are perhaps pricing in," the analysts said in a note.

Stock movers: BP PLC (BP.LN) (BP.LN) lost 1.3% after the announcement of the Deepwater Horizon charge.

Rio Tinto PLC (RIO) (RIO) (RIO) said it continues to expect shipments of iron ore from its Western Australia mines (http://www.marketwatch.com/story/rio-tinto-sees-record-quarterly-iron-ore-shipments-2018-01-16) will likely rise this year, after record exports in the last quarter allowed it to hit a target for 2017. But the miner's shares traded down by 0.6%.

Other mining shares were lower. Antofagasta PLC (ANTO.LN) fell 1.6%, and Anglo American PLC (AAL.LN) lost 1.2%.

Shares in Associated British Foods (ABF.LN) added 1.4% following ratings upgrade to overweight from equal weight at Barclays.

Advancers included supermarket chain Tesco PLC (TSCO.LN) , higher by 0.8%, respectively.

(END) Dow Jones Newswires

January 16, 2018 04:56 ET (09:56 GMT)