United Kingdom

BHP drags the FTSE 100 lower, midcaps hit record high

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Pedestrians leave and enter the London Stock Exchange in London, Britain August 15, 2017. REUTERS/Neil Hall/File Photo/File Photo

  • UK inflation drops to 2%, in line with BoE target
  • Persimmon rises on strong forward sales
  • Insurer M&G edges higher on takeover deal
  • FTSE 250 at record closing high of 23,836.37 points

Aug 18 (Reuters) - London's FTSE 100 was dragged lower by BHP Group on Wednesday as investors fretted over the miner's sale of its petroleum arm, while the midcap index closed at a record high after inflation fell sharply.

The blue-chip FTSE 100 (.FTSE) dropped 0.2% with BHP Group (BHPB.L)weighing the most. The stock tumbled 5.9%, after hitting record highs on initial optimism over BHP's deal with Woodside Petroleum (WPL.AX). read more

The domestically focussed mid-cap index (.FTMC) rose 0.6% to a record closing high of 23,836.37 points, after British inflation unexpectedly fell to the Bank of England's 2% target in July, assuaging some fears over the bank tightening policy.

Still, economists said the reading was most likely a blip, as the reopening of the economy after lockdown drives prices higher. Inflation is considerably higher than the 0.4% level seen in February. read more

A recent resurgence in COVID-19 cases across the globe has weighed on the FTSE 100, which is exposed to trade disruptions caused by the virus. But the midcap index has benefited from optimism over a local vaccination program.

"(The UK's inflation) could just as easily move higher, probably driven by the delayed economic reopening that was deferred from June," said Michael Hewson, chief market analyst at CMC Markets.

Hewson also noted a lot of retailers are nudging prices higher as they look to claw back revenue lost from lockdowns, while the wage growth is much higher than the headline CPI number - all signs that inflation could go up.

Persimmon (PSN.L), Britain's No. 2 homebuilder, rose 1.5% after it said its current forward sales were up about 9% from pre-pandemic levels. read more

British insurer M&G plc (MNG.L)rose 0.6% after it said it would buy financial advice provider Sandringham Financial Partners in a deal that would add assets worth more than 2.5 billion pounds to M&G.

Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V, Subhranshu Sahu and Nick Zieminski

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