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London open: Stocks slide as investors weigh China CPI and await BoE policy

Renae Dyer

LONDON (ShareCast) - (ShareCast News) - London stocks were in the red on Thursday as a pick-up in China inflation was offset by the worst producer price index figure in six years. China's consumer price index increased 2% in August from a year earlier following a 1.6% rise a month earlier, beating forecasts for a 1.8% gain.

The producer price index, however, fell 5.9% in August more than the 5.6% decline expected and July's 5.4% drop.

"China's inflation may have increased to 2%, but that is due to the increasing expense of food rather than any economic improvement; the country's producer price index, meanwhile, saw its worst drop in six years as it fell by 5.9%, adding yet another number to the tower of troublesome data coming from China," said Connor Campbell, financial analyst at Spreadex.

Trying to soothe concerns, Chinese premier Li Keqiang said China has the capacity to prevent its economy from falling apart and to succeed in its economic goals this year.

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Speaking at the World Economic Forum in Beijing on Thursday, Li said China will allow foreign central banks to invest in the onshore currency market. China will establish the yuan's cross-border payment system before year-end, he added.

BoE (Shenzhen: 200725.SZ - news) policy announcement The Bank of England is expected to keep interest rates and it asset purchase programme unchanged at 0.5% and £375bn respectively, when it announces its latest policy measures at 1200 BST.

Analysts see the Bank holding back on any changes amid weak inflation and global market turbulence caused by China's slowdown concerns.

Alongside the policy decision, the Bank will also release the minutes of the Monetary Policy Committee meeting that determined the outcome, with the focus on any hints of the timing of a rate hike.

"We expect the overall tone of the MPC (KOSDAQ: 050540.KQ - news) minutes to be broadly unchanged, even though it may strike a somewhat more dovish tone in the face of increased uncertainties," according to Barclays (LSE: BARC.L - news) analysts.

"We expect the BoE to keep its stance unchanged at its September MPC meeting as it discusses the consequences of the Chinese growth transition and market volatility for the UK." Last month the BoE crammed in the policy announcement and meeting minutes in with the Inflation Report in what was dubbed 'Super Thursday'. This time round won't be as hectic, with the absence of the Inflation Report, but any change to the 8-1 vote within the MPC on an interest rate hike will spark interest. Ian McCafferty was the only policymaker within the MPC who voted in favour of a rate increase last month.

Companies Dixons Carphone (Stuttgart: CWB.SG - news) was a top riser after the company reported an 8% like-for-like increase in first quarter revenue, driven by market share gains in mobile phones.

Wm Morrison slumped after posting 35% drop in underlying first half pre-tax profit as revenue fell on the back of price cuts.

Next (Other OTC: NXGPF - news) jumped after reporting a 7.1% gain in first-half pre-tax profit, with revenue up as the company sold more items at full price than it had expected.

Home Retail Group declined after saying like-for-like sales at Argos fell 2.8% to £897m in the second quarter due to a decrease in sales of electrical goods driven by TVs, tablets and white goods.

Market Movers techMARK 3,098.28 -0.39% FTSE 100 6,178.36 -0.81% FTSE 250 17,069.87 -0.49% FTSE 100 - Risers Dixons Carphone (DC.) 428.60p +2.07% Next (EUREX: NXTI.EX - news) (NXT) 7,820.00p +1.89% Barratt Developments (LSE: BDEV.L - news) (BDEV) 646.50p +1.33% Ashtead Group (LSE: AHT.L - news) (AHT) 1,001.00p +1.06% Taylor Wimpey (LSE: TW.L - news) (TW.) 200.80p +0.96% Marks & Spencer Group (MKS) 511.00p +0.69% Persimmon (PSN) 2,113.00p +0.62% Sky (Amsterdam: BK8.AS - news) (SKY (LSE: BSY.L - news) ) 1,046.00p +0.58% Inmarsat (LSE: ISAT.L - news) (ISAT) 1,028.00p +0.49% Whitbread (WTB) 4,678.00p +0.36% FTSE 100 - Fallers BHP Billiton (NYSE: BBL - news) (BLT) 1,071.00p -4.97% Admiral Group (LSE: ADM.L - news) (ADM) 1,535.00p -4.89% Morrison (Wm) Supermarkets (MRW) 168.50p -4.21% Glencore (Amsterdam: GX8.AS - news) (GLEN) 139.25p -3.43% Standard Life (LSE: SL.L - news) (SL.) 412.40p -2.92% Standard Chartered (BSE: 580001.BO - news) (STAN) 727.60p -2.20% Hargreaves Lansdown (LSE: HL.L - news) (HL.) 1,170.00p -1.93% Tesco (TSCO) 187.55p -1.91% Weir Group (Other OTC: WEIGF - news) (WEIR) 1,253.00p -1.65% British American Tobacco (BATS) 3,413.00p -1.63% FTSE 250 - Risers PayPoint (PAY) 1,053.00p +3.24% Just Retirement Group (JRG) 192.90p +2.39% Rank Group (RNK) 264.00p +2.17% Bellway (Other OTC: BLWYY - news) (BWY) 2,594.00p +2.05% Polymetal International (Other OTC: AUCOY - news) (POLY) 506.50p +1.97% Vectura Group (LSE: VEC.L - news) (VEC) 187.50p +1.74% Crest Nicholson Holdings (CRST) 587.50p +1.64% TalkTalk Telecom Group (TALK) 308.60p +1.31% Supergroup (Stuttgart: 49S.SG - news) (SGP) 1,384.00p +1.24% Spire Healthcare Group (SPI) 353.00p +0.97% FTSE 250 - Fallers Tullow Oil (LSE: TLW.L - news) (TLW) 198.00p -4.67% Premier Oil (LSE: PMO.L - news) (PMO) 86.35p -4.43% Lonmin (LMI) 24.62p -2.96% NMC Health (LSE: NMC.L - news) (NMC (Other OTC: NMCX - news) ) 753.00p -2.84% AO World (Other OTC: AOWDF - news) (AO.) 156.70p -2.67% Ashmore Group (Other OTC: AJMPF - news) (ASHM) 250.00p -2.65% William Hill (Other OTC: WIMHF - news) (WMH) 347.50p -2.58% Entertainment One Limited (Other OTC: ENTMF - news) (ETO) 278.50p -2.52% Laird (LRD) 372.20p -2.16% Henderson Group (LSE: HGG.L - news) (HGG) 259.60p -2.07% FTSE TechMARK - Risers Gresham Computing (LSE: GHT.L - news) (GHT) 113.00p +2.73% KCOM Group (LSE: KCOM.L - news) (KCOM) 96.25p +2.39% Promethean World (Other OTC: PMTWF - news) (PRW) 40.00p +1.59% NCC Group (LSE: NCC.L - news) (NCC (BSE: NCC6.BO - news) ) 260.25p +1.07% Spirent Communications (Other OTC: SPMYY - news) (SPT (Taiwan OTC: 8431.TWO - news) ) 79.75p +0.95% Dialight (DIA (Amsterdam: DI6.AS - news) ) 627.50p +0.72% IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 200.98 +0.13% E2V Technologies (LSE: E2V.L - news) (E2V) 246.25p +0.10% FTSE TechMARK - Fallers SDL (SDL (LSE: SDL.L - news) ) 365.00p -3.38% Oxford Instruments (Other OTC: OXGGY - news) (OXIG) 645.50p -3.01% Skyepharma (SKP) 361.00p -1.63% XP Power Ltd (LSE: XPP.L - news) . (DI (KSE: 003160.KS - news) ) (XPP) 1,590.00p -1.24% Oxford Biomedica (LSE: OXB.L - news) (OXB) 8.10p -0.98% Sepura (SEPU) 180.00p -0.83% Ricardo (RCDO) 886.25p -0.81% RM (RM (LSE: RM.L - news) .) 171.25p -0.58%