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LONDON (MarketWatch) — U.K. stocks climbed for a fifth straight day on Tuesday as weaker-than-expected inflation data eased pressure on the Bank of England to tighten monetary policy this year.
The FTSE 100 index UKX, +0.56% gained 0.6% to end at 6,779.31.
Investors welcomed the latest reading on U.K. inflation, which showed consumer prices grew by 1.6% in July, down from 1.9% in June and missing analyst expectations of a 1.8% reading. With the U.K. economy on a solid recovery track, a rapid decline in unemployment and inflation last month close to the BOE’s 2% target, some economists had started to speculate that a rate hike could come as soon as November.
However, the July inflation data give the BOE’s Monetary Policy Committee more reason to keep interest rates at a record low until the first quarter of 2015, Jake Trask, corporate dealer at UKForex, said in a note.
“With dovish comments from BOE Governor Mark Carney last week, this fall in inflation will provide the MPC with even more reason to hold out,” he said. “We may learn more tomorrow about the intended time frame for a rate hike when the minutes of the latest MPC meeting are released.” Read: Dissent within BOE’s ranks could shine light on rate hike
The pound GBPUSD, -0.66% dropped after the data, trading at $1.6614, down from $1.6692 ahead of the report. In late U.S. trade on Monday the pound traded around $1.673.
Also falling in London, shares of BHP Billiton PLC BLT, -4.93%BHP, -3.72%BHP, +1.35% slid 4.9% after the mining firm said it would spin off several assets, including its nickel mines and aluminum smelters, which will be listed on Australia’s stock exchange. The company also reported a 23% rise in annual profit.
Among other notable movers, shares of AstraZeneca PLC AZN, +0.88%AZN, +0.27% gained 0.9% after the U.S. Department of Justice dropped an investigation into Plato, a clinical trial with heart drug Brilinta.