UK stocks fall as inflation stays rigid, precious miners drag

By Siddarth S and Khushi Singh

(Reuters) -The UK’s exporter-heavy FTSE 100 edged lower on Wednesday after data showed inflation slowed as expected in July, while precious metal miners fell as gold prices came under pressure.

The blue-chip index FTSE 100 slid 0.4%, extending losses after hitting a one-month low on Tuesday. The index marked its fourth successive daily decline and had its worst run of losses since early July.

Annual consumer price inflation cooled to 6.8% in July from 7.9% in June, its lowest annual rate since February 2022, but still remained elevated.

However, core inflation soured the sentiment as it came in at a hotter-than-expected 6.9% in July, while inflation in services rose to 7.4% from 7.2% in June.

Sterling rose 0.35% to $1.2744 following the data, as the latest UK inflation numbers reinforced bets that the BoE will likely hike interest rates again. [GBP/]

“Today’s figure does buy the government a bit of breathing space while it’s the core (inflation) figure that will keep pressure on the BoE to keep raising interest rates until the sticky tendrils have been eradicated,” said Danni Hewson, head of financial analysis at AJ Bell in a note.

Traders are betting on an over 89% probability for the UK central bank to hike interest rates by 25 basis points in its September meeting. [0#BOEWATCH]

Precious metal miners fell 2.1%, touching their lowest levels in over seven years, as gold prices hovered near eight-week lows. [GOL/]

The domestically-focused FTSE 250 fell 0.4%.

Non-life insurers were the biggest gainers of the session, rising 3.2%, led by a 7.2% jump in Admiral shares, as the British motor and home insurer reported higher half-year profit.

Shares of Aviva rose 0.9%, after the life and general insurer posted a forecast-beating rise in first-half operating profit.

Insurer Direct Line also spiked 7.1%, becoming the top gainer on the mid-cap index.

Meanwhile, global infrastructure company Balfour Beatty was the biggest loser on the index, down 10.6%, hurt by a tech downturn in its U.S. office projects.

(Reporting by Siddarth S and Khushi Singh in Bengaluru; Editing by Nivedita Bhattacharjee, Saumyadeb Chakrabarty and Barbara Lewis)