London open: Stocks flat but Vodafone jumps on Swisscom deal

(Sharecast News) - London stocks were steady in early trade on Friday as investors continued to mull another hotter-than-expected US inflation reading, but Vodafone surged on news Swisscom is buying its Italian business. At 0830 GMT, the FTSE 100 was flat at 7,741.26.

Richard Hunter, head of markets at Interactive Investor, said: "Investor inflation jitters have not been far from the surface over recent months and the latest release resulted in markets touching on the brakes.

"The wholesale producer price index showed a reading at the headline level of 0.6% against an expected 0.3%, while the core figure which excludes food and energy came in at 0.3%, marginally above estimates of 0.2%.

"The economic picture was further complicated by a rise of 0.6% in retail sales, albeit slightly shy of estimates, implying that consumer strength remains intact. While the figures were far from startling, investors nonetheless needed to reassess both whether there is any possibility of inflation accelerating once more, and the knock-on impact that would have on the Federal Reserve's decision to reduce interest rates. As such, the Fed's policy meeting next week will assume extra significance given this latest data release."

In equity markets, Vodafone rallied as it emerged that Swisscom will take over the London-listed company's Italian unit for €8bn, creating the country's second-largest broadband provider.

Volution Group was the top gainer on the FTSE 250 as it said full-year earnings per share were set to be ahead of consensus expectations following a "strong" first half.

Heat treatment and thermal processing services specialist Bodycote rose as it delivered an increase in annual profits, driven by a strong performance at its aerospace and defence division.

Scottish Mortgage Investment Trust advanced after saying it was making at least £1bn available for buybacks over the next two years.

British Airways and Iberia owner IAG flew higher after upgrades to 'outperform' at both Raymond James and at BNPP Exane.

Sticking with broker notes, Mondi was lifted by an upgrade to 'buy' from 'hold' at Jefferies, while Smurfit gained after an upgrade to 'overweight' at Morgan Stanley.

British Land and Derwent London were both up after upgrades to 'buy' at Shore Capital.

Elsewhere, Barratt and Redrow dipped after the UK's competition regulator said it was taking an initial look into Barratt's £2.52bn takeover of its homebuilding rival.

Berkeley Group was little changed as it reiterated its full-year outlook and said it had secured the bulk of sales for the next financial year.

Market Movers

FTSE 100 (UKX) 7,741.26 -0.02% FTSE 250 (MCX) 19,491.33 0.03% techMARK (TASX) 4,503.93 -0.01%

FTSE 100 - Risers

Vodafone Group (VOD) 68.76p 4.04% International Consolidated Airlines Group SA (CDI) (IAG) 154.75p 3.89% Smurfit Kappa Group (CDI) (SKG) 3,586.00p 2.69% Smith (DS) (SMDS) 343.30p 2.14% Mondi (MNDI) 1,338.50p 2.06% Admiral Group (ADM) 2,736.00p 1.98% Scottish Mortgage Inv Trust (SMT) 793.40p 1.59% Standard Chartered (STAN) 653.80p 1.21% Antofagasta (ANTO) 1,932.50p 1.18% Glencore (GLEN) 421.55p 1.03%

FTSE 100 - Fallers

Convatec Group (CTEC) 281.00p -2.29% Reckitt Benckiser Group (RKT) 5,138.00p -2.17% Intertek Group (ITRK) 4,855.00p -1.84% Spirax-Sarco Engineering (SPX) 10,410.00p -1.61% Anglo American (AAL) 1,807.80p -1.41% Halma (HLMA) 2,216.00p -1.29% Melrose Industries (MRO) 609.20p -0.98% Persimmon (PSN) 1,273.50p -0.97% Diageo (DGE) 2,883.50p -0.93% Smith & Nephew (SN.) 1,074.00p -0.88%

FTSE 250 - Risers

Volution Group (FAN) 444.80p 4.66% Bodycote (BOY) 656.00p 3.88% Dunelm Group (DNLM) 1,116.00p 2.86% Playtech (PTEC) 478.40p 2.62% Victrex plc (VCT) 1,297.00p 2.37% Grafton Group Ut (CDI) (GFTU) 997.00p 2.26% Dr. Martens (DOCS) 92.50p 2.10% NCC Group (NCC) 125.40p 1.95% FirstGroup (FGP) 168.70p 1.93% Clarkson (CKN) 3,960.00p 1.93%

FTSE 250 - Fallers

Bank of Georgia Group (BGEO) 4,810.00p -7.14% C&C Group (CDI) (CCR) 149.20p -2.10% Wizz Air Holdings (WIZZ) 2,108.00p -1.95% Watches of Switzerland Group (WOSG) 366.80p -1.82% Babcock International Group (BAB) 504.50p -1.75% Domino's Pizza Group (DOM) 367.00p -1.71% Moonpig Group (MOON) 170.80p -1.56% Ashmore Group (ASHM) 193.70p -1.32% Oxford Instruments (OXIG) 2,060.00p -1.20% Renishaw (RSW) 4,140.00p -1.19%