LONDON MARKETS: SABMiller Shares Drag, Pearson Perks Up In London Trade

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- Stocks in the U.K. fell Tuesday, with SABMiller PLC shares giving back some gains made in the previous session, but an upgrade for Pearson PLC guided the publisher's shares higher.

Data: Stocks held to losses after the U.K.'s inflation-rate reading for August came in below expectations, which eases pressure on the Bank of England to raise interest rates. The FTSE 100 index finished 0.2% lower at 6,792.24. The index finished 0.1% lower on Monday on market uncertainty about whether Scotland will vote to break away from the U.K.

The U.K.'s Office for National Statistics on Tuesday said August inflation was 1.5% on a year-over-year basis. Analysts polled by The Wall Street Journal had expected, on average, inflation to hold steady at 1.6%. Declines in prices for motor fuels, food and non-alcoholic beverages were the largest contributors to the downward trend.

Separately, the ONS said U.K. housing prices in August rose 11.7% in the year to July, with prices in London surging 19.1% in the year.

The pound (GBPUSD), which has been hammered lately on uncertainty surrounding the result of Scotland's independence referendum to be held Thursday, traded at $1.6282, compared with late Monday at around $1.6231.

Stocks: On Tuesday, SABMiller (SBMRY) fell 2.1%, weighing down the FTSE 100. The shares on Monday leapt 8.7% on news that Anheuser-Busch InBev NV (AHBIY) was talking to banks about financing a deal to buy the London-listed brewer.

Also ending lower was chip designer ARM Holdings , by 1.9% after keying off a hefty selloff in U.S. tech stocks overnight on Wall Street.

Pearson shares , however, nearly topped the FTSE 100. They rose 1.7% after Morgan Stanley upgraded the publisher's stock to overweight from equal-weight. "We think the restructuring is complete," and per-share earnings could rise 15% to 20% in 2015, its analysts said. The company "now addresses a bigger market with a more flexible cost base. It is time to own Pearson again," wrote Morgan Stanley analyst Patrick Wellington in a note.

Off the FTSE 100, shares in Asos PLC fell 8.9% after the online fashion retailer warned on 2015 profit, with analysts estimating the earnings downgrade could reach as much as 30%.

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