European investors trade cautiously
London's main benchmark struggled for direction as inflation lifted to its highest rate in two-and-a-half years, but was still below expectations

Blue chip shares struggled for direction as inflation lifted to its highest rate in two-and-a-half years, though it still came in below expectations.

Consumer Prices Index (CPI) inflation hit 1.8% last month, the Office for National Statistics (ONS) said, up from a rate of 1.6% in December. The measure was primarily pushed up by petrol price rises.

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It is the fourth consecutive month that the rate has risen and takes inflation to its highest since June 2014, but is still below the 1.9% expected by the City.

The FTSE 100 Index edged up 2.3 points to 7281.3 in afternoon trading, as inflation inched closer to the Bank of England's 2% inflation target. The FTSE 250 Index rose 21.4 points to 18780.2.

IG chief market analyst Chris Beauchamp said: "Evidently markets were hoping for a stronger reading."

Engine-maker Rolls-Royce was the biggest faller in the top flight after it reported a record £4.6bn ($5.7bn) annual loss, weighed down by the pound's fall and its recent bribery settlement.

The FTSE 100 engineer said one-off factors, such as £4.4bn of paper losses from currency hedging contracts following a 16% fall in the value of sterling since June's Brexit vote, accounted for the loss.

It also revealed last month that it agreed to pay £671m to settle corruption cases with UK, US and Brazilian authorities. Shares fell almost 4%, or 28p to 712p.

The biggest afternoon risers in the FTSE 100 Index were TUI (+65p to 1222p), Pearson (+17.5p to 668.5p), Capita (+12p to 525.5p), Fresnillo (+31p to 1555p) and Randgold Resources (+120p to 7530p).

The biggest afternoon fallers in the FTSE 100 Index were Rolls-Royce (+28p to 712p), BAE Systems (-10p to 606p), Anglo American (-22.5p to 1387p), Micro Focus (-25p to 2229p) and Reckitt Benckiser (-77p to 6998p).

The biggest afternoon risers in the FTSE 250 Index were Acacia Mining (+32.4p to 497.1p), Virgin Money (+13p to 342p), RPC (+32p to 945p), Spectris (+75p to 2499p) and Entertainment One (+7.1p to 244.4p).

The biggest afternoon fallers in the FTSE 250 Index were Evraz (-9.2p to 244.7p), Mitchells & Butlers (-7.2p to 249.1p), Vectura Group (-3.7p to 142.1p), Greggs (-22p to 1011p) and Euromoney (-21p to 1098p).

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