London markets fell after a surprise jump in inflation

London's main markets fell on Wednesday as an unexpected rise in inflation led to a torrid trading session.

The Office of National Statistics (ONS) showed that consumer price index (CPI) inflation rose to 4% in December from 3.9% in November – the first rise since February last year.

The rise caught traders by surprise and pushed back expectations that interest rates could be cut soon, dragging the FTSE 100 to its lowest level in seven weeks.

London's main financial index fell 1.48%, or 112.05 points, to 7,446.29 points.

Chris Beauchamp, chief market analyst at IG, said: “The FTSE 100 was the worst for 2024 since Wednesday morning's inflation data.

“Today's UK inflation news hit domestic stocks hard, but international firms such as the mining sector were hit by a stronger dollar, which pushed down commodity prices.

“This double whammy poses problems for the index, and a return to the October lows is a distinct possibility.”

In another place c Europemajor markets also fell as they also took cues from disappointing economic data from China.

Germany's Dax closed down 0.84%, while the Cac 40 fell 1.1%.

In the States, major US markets opened lower, followed by Europe, albeit with more modest declines.

Sterling was the main beneficiary of renewed expectations that rates could stay higher for longer.

At market close, the pound was up 0.24% at US$1.266 and 0.48% at €1.166 London.

In company news, pub and bar group Mitchells & Butlers was among the few risers on the day after it hailed a “strong” performance for the first eight weeks of the financial year.

The company behind All Bar One and Toby Carvery said it expects sales results in 2024 to be near the upper end of its current financial expectations after rising 7.2% like-for-like in the past two months.

The hotel firm's shares rose 9.2p to 264p as a result.

Manufacturer of handbags Mulberry tree closed lower after it became the latest firm weighed down by a slowdown in demand for luxury goods.

The British high-end retailer told shareholders that group revenue fell 8.4% in the 13 weeks to December 30, with retail sales down 1.5%.

It was down 10p to 135p late in the game.

Elsewhere in retail, Superdry had another weak session following reports on Tuesday that it had brought in advisers from PwC to assess debt options. The shares closed 4.8p lower at 21.2p.

Hornby was unchanged at 15.5p at the close after the model train specialist told traders it was back on track to profitability following strong Black Friday and Christmas sales.

Elsewhere, Brent crude was down 0.54% at US$77.48 (£61.15) as markets closed in London.

The biggest gainers on the FTSE 100 were IMI, up 57p to 1,608p, Smith & Nephew, up 17p to 1,082p, ConvaTec, up 3.8p to 247p, JD Sports, up 1.45p to 108.8p, and BAE Systems, up 11p. to 1,192 r.

Biggest decliners in the FTSE 100 were Ocado down 38p to 580p, Entain down 49p to 894.8p, ​​Persimmon down 73p to 1395.5p, Glencore down 19.65p to 419 .5p and Land Securities fell 27.4p to 641p.