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LONDON (Alliance News) - London shares were higher Tuesday midday, with analysts saying the latest set of weak economic data from China could prompt further stimulus, while lowered global growth forecasts from the International Monetary Fund and UK inflation figures added to a busy economic calendar.

The FTSE 100 index was up 2.1% at 5,902.92 points, the FTSE 250 up 1.3% at 16,157.16 and the AIM All-Share up 0.6% at 692.44. In Europe, the CAC 40 in Paris was up 2.6% and the DAX 30 in Frankfurt up 2.3%.

The pound rose against the dollar after data from the Office for National Statistics showed that UK inflation rose in December.

UK consumer prices rose 0.2% on a yearly basis, in line with economists expectations, following a 0.1% increase in November. This was the second consecutive rise in prices. Month-on-month, consumer prices edged up 0.1%, in line with forecast, after staying flat in November.

Core inflation, which excludes energy, food, alcoholic beverages and tobacco, accelerated to 1.4% in December, with economists expecting it to remain unchanged from the 1.2% rise of November.

"With the rate of underlying inflation growing faster than expected, this supports our view that inflation is likely to experience a solid recovery even if transitory downside pressures on the headline rate persist for a little while longer," said Berenberg senior analyst Kallum Pickering.

Sterling spiked to USD1.4340 after the data, but gave back some of those gains shortly afterwards. The pound was quoted at USD1.4302 Tuesday midday, still close to lows not seen since mid-2010.

Another report showed that UK factory gate prices dropped at a slower pace in December. Output prices logged an annual drop of 1.2%, compared to a 1.5% decrease in November. On a monthly basis, output prices decreased 0.2% in December, having also fallen by 0.2% in November. Both monthly and annual figures for December matched economists' expectations.

The UK house price inflation accelerated for the fourth straight month in November to the highest level in eight months. The house price index climbed 7.7% year-over-year in November, faster than October's 7.0% rise. The latest increase in the measure was the sharpest since March 2015, when prices grew 9.6%.

Meanwhile, the International Monetary Fund slashed its world growth forecast for 2016 and 2017 as the pickup in global activity is expected to be more gradual than expected earlier, especially in the emerging market and developing economies.

In an update to its biannual World Economic Outlook, the Washington-based lender cut its 2016 growth forecast to 3.4% from 3.6%. The outlook for 2017 was lowered to 3.6% from 3.8%. The growth estimate for 2015 was retained at 3.1%.

"A modest and uneven recovery is expected to continue" in advanced economies, but the situation is "diverse" and in many cases "challenging" for emerging and developing economies, the IMF said.

Miners and other stocks with exposure to China were leading gainers in London, following a weak set of economic data from China that analysts day could result in further official stimulus measures.

"The added measures could now be imminent, with many expectations pointing to the fact that we could well get an announcement before the start of the [Chinese] New Year celebrations at the beginning of February," said James Hughes, chief market analyst at GKFX.

The Chinese economic growth eased to 6.9% in 2015, the least since 1990, from 7.3% in the previous year, data published by the National Bureau of Statistics showed. Growth also was slower than the government's full-year target of about 7.0%.

In the fourth quarter, gross domestic product grew 6.8% year-over-year, while economists had expected the growth rate to remain unchanged at 6.9%. This was the weakest growth since 2009. On a quarterly basis, GDP advanced 1.6% in the three month-period to December, but slower than previous quarter's 1.8% rise. The sequential growth was expected to remain steady at 1.8%.

Meanwhile, China's industrial production grew at the weaker pace of 5.9% year-over-year in December following November's 6.2% rise. The expected rate of increase was 6.0%. Likewise, Chinese retail sales climbed 11.1% in December, slightly weaker than prior month's 11.2% increase and the 11.3% rise expected by economists.

"The added upside came from the fact that now we were seeing growth forecasts from China actually in line with what we as analysts and the wider market had been predicting," added GKFX's Hughes.

China-exposed stocks Prudential and Aberdeen Asset Management were up 4.0% and 3.6%, respectively. Anglo American, up 12%, Glencore, up 11%, BHP Billiton, up 6.0% and Rio Tinto, up 5.3%, also were among the best blue-chip performers,

Rio Tinto reported its fourth-quarter global iron ore production was 87.2 million tonnes, up 10% from the year-ago quarter. Global iron ore shipments for the quarter improved 11% to 91.3 million tonnes.

"We will continue to focus on disciplined management of costs and capital to maximise cash flow generation throughout 2016," Rio Tinto Chief Executive Sam Walsh said.

Global iron ore production in 2016 is expected to be around 350 million tonnes. Rio Tinto's expected share of production of bauxite, alumina and aluminium is 45 million tonnes, 7.8 million tonnes and 3.6 million tonnes, respectively.

Elsewhere in London, oil-related stocks were higher after crude prices surpassed the USD30 line, following the multi-year lows seen on Monday. Brent oil was standing at USD30.12 a barrel at midday, while West Texas Intermediate was at USD30.05 a barrel.

BP was up 2.8%, Royal Dutch Shell 'A' shares up 2.7% and BG Group 1.3%. Mid-caps Tullow Oil and Cairn Energy were up 6.3% and 4.7%, respectively.

In the FTSE 250, Ocado Group was by far the best mid-cap performer, up 15%, following a report in the Daily Mail newspaper which suggested US online retail giant Amazon.com was running the rule over a possible bid for the online grocery delivery service.

The New York market reopens after the Martin Luther King's Birthday holiday on Monday, with the Dow Industrials and S&P 500 both seen up 1.5% and the Nasdaq 100 pointed up 1.6%.

In the US corporate calendar, a fourth-quarter update from financial powerhouse Morgan Stanley is expected at 1200 GMT, while the same from on-demand entertaiment streaming service Netflix is expected after the US market close.

Bank of England Governor Mark Carney is speaking at Queen Mary University in London at midday.

By Daniel Ruiz; danielruiz@alliancenews.com

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