Inflation dip drowns out SABMiller boost for sterling

By Patrick Graham

LONDON, Oct (HKSE: 3366-OL.HK - news) 13 (Reuters) - A surprise fall in British consumer prices in September drove sterling to its weakest against the euro since May on Tuesday, quelling any positive fallout for the pound from the confirmation of a major merger.

The pound had touched a three-week high in early trade in Europe on the back of SABMiller (Xetra: BRW1.DE - news) 's acceptance of a cash and share offer from Anheuser-Busch InBev worth 69 billion pounds ($106 billion).

But that all turned around in the 10 minutes leading into the inflation numbers, which showed the consumer price index fell 0.1 percent last month, in contrast to forecasts for a minimal rise.

The pound sank around half a percent against both the euro and dollar before the inflation numbers and then took another small dip afterwards.

By 0839 GMT it traded at half a percent lower on the day at $1.5269. A generally buoyant euro traded 0.7 percent higher at 74.54 pence.

Gilt futures also jumped about 10 ticks to a day's high of 118.90 after the data. (Additional reporting by Jemima Kelly and Ana Nicolaci da Costa)