Market Update: Inflation fall brings some cheer

Some brighter news on inflation and house prices help share prices reverse early falls caused by renewed eurozone debt concerns.

May consumer price inflation fell by a more-than-forecast 3.4% last month, while latest government data showed that UK house prices rose 10.1% year-on-year in April.

Also helping sentiment was renewed activity on the takeover front following an unwelcome approach from News Corporation for the rest of BSkyB, 112p higher at 712p.

By 10am the FTSE 100 index was six points up at 5,209 and the Mid-250 index 50 points firmer at 9,845.

Fresh positive broker comment after a series of upbeat US presentations continued to benefit Intercontinental Hotels, 40p higher at £12.37 and favourable broker recommendations also supported 3i Group at 299p, Whitbread £14.76 and ICAP 424.5p, up 6.5p to 25p.

Tesco, up 4p to 396p, shook off initial disappointment with sluggish sales figures and GDF Suez takeover speculation enlivened International Power at 316p, up 4p.

British Airways rose 3p more to 209p awaiting the outcome of talks to prevent further cabin crew strikes.

Defensive stocks eased as investors switched back to the riskier sectors.

United Utilities at 567.5p, BAT £21.69, Aviva 341p, Imperial Tobacco £18.95 and Reckitt Benckiser £32.60 fell 3.5p to 23p.

Positive broker comment underpinned Tullett Prebon at 293p, up 9.5p but Healthcare Locums tumbled 38p to 179p as offer talks collapsed.

Brit Insurance lost another 12p to 917p awaiting further takeover developments