FTSE hits four month high as Standard Life leads insurers higher

The FTSE 100 hit a new four-month high of 5876.22 on Tuesday as the UK Index was supported by gains in insurance firms thanks largely to a 5% rally in Standard Life shares.

Within the first hour of trading, the FTSE 100 was trading higher by 0.7% or 40 points, whilst the DAX and CAC indices both enjoyed gains of 1.1% and 0.9% respectively. European Indices held onto most of the gains throughout the day too with investors showing an unwillingness to sell their holdings.

The FTSE 100 closed at 5864, marking a gain of 32pts.

Most of the gains in London trading were supported by the rally in Standard Chartered shares. The insurer’s shares price rallied to its highest levels since December 2008, after reporting that half-year profits rose by 15% to £302m, smashing consensus forecasts of £254m. The results were boosted by strong performance in the firm’s British business, where profits rose over 60%, whilst lower costs also helped to improve margins.

Shares in steelmaker Evraz also rallied 1.4% after the miner reported that it had resumed operations in its steel and vanadium operations in South Africa after recent industrial action caused it to shutdown.

On the downside to trading, however, was CRH, whose shares slumped 4% after the buildings group told shareholders that there was no change in earnings forecasts for the year, whilst the first six months saw EBITDA come in line with forecasts of €568m.

Eyes remained fixed also on economic data out of Europe today, with a raft of announcements playing a role on near-term risk appetite.

French flash GDP met forecasts of zero growth on a quarterly basis, whilst German GDP grew less than expected at 0.3% for the quarter, against expectations of 0.5% growth.

UK inflation surprisingly rose in July, rising to 2.6% from 2.4% when a fall to 2.3% was expected, which would have been the lowest levels for UK inflation since November 2009. Instead, inflation rose and immediately threw the cat amongst the pigeons on how flexible the Bank of England can be regarding further asset purchases, with more purchases likely pushing inflation higher as a consequence.

Within the inflationary data, there was the smallest fall in clothing and footwear prices from June to July since 1996 as retailers brought forward their purchases in expectations of heightened spending in the run up to the Olympics. At the same time, passenger transport by air rose 21.7%, which is yet another influence of the Olympics as officials, tourists and teams made their way into the UK before the start of the games.

Later in the session, US retail sales outperformed expectations by rising 0.8% on a monthly basis and beating forecasts of +0.3%.