6th May 2025 12:00
(Alliance News) - European stocks were in the red at midday on Tuesday, following an unexpected vote that saw German conservative leader Friedrich Merz fail to be elected as chancellor.
The FTSE 100 index was down 17.29 points, 0.2%, at 8,579.06. The FTSE 250 was down 10.15 points at 20,230.36, and the AIM All-Share was down 0.25 points at 707.50.
The Cboe UK 100 was down 0.4% at 854.95, the Cboe UK 250 was down 0.1% at 17,753.97, and the Cboe Small Companies was down 0.6% at 15,495.17.
The UK services sector slipped into contraction in April for the first time since late 2023, as a renewed drop in new work and the sharpest fall in export sales in over four years weighed on business activity, survey data from S&P Global showed on Tuesday.
The S&P Global UK services purchasing managers index fell to 49.0 points in April from 52.5 in March, signalling a marginal decline in output and ending a 17-month growth streak. A reading below the 50-point threshold indicates contraction, while one above signals growth.
The figure, however, came in slightly above the flash estimate of 48.9 points published on April 23. Firms blamed weaker business investment, risk aversion and US tariffs for a broad pull-back in domestic and overseas orders.
Registrations of new cars in the UK fell by 10.4% last month, new figures from industry body the Society of Motor Manufacturers & Traders show. SMMT said 120,331 new cars were registered in the UK in April.
In European equities on Tuesday, the CAC 40 in Paris was down 0.6%, while the DAX 40 in Frankfurt was 1.1% lower.
German conservative leader Friedrich Merz is planning to seek election as chancellor in a second round of voting, his parliamentary group said on Tuesday, after Merz failed to garner the necessary absolute majority in parliament in a first vote.
"As a coalition - the CDU/CSU and SPD - we will once again propose Friedrich Merz for the second ballot," said the leader of the conservative bloc's parliamentary group, Jens Spahn.
Merz received 310 votes in favour, with 307 lawmakers voting against. Three abstained, one was invalid, and nine votes were missing, meaning Merz was short of the 316 needed to secure his long-awaited election to succeed Olaf Scholz.
The result takes Germany into unprecedented waters, with no candidate for chancellor ever having failed to secure an absolute majority in the first round of voting. According to the Basic Law, Germany's de facto constitution, lawmakers have 14 days to elect a chancellor with an absolute majority.
In response, Germany's far-right AfD on Tuesday called for a fresh general election.
"Merz should step aside and the way should be cleared for a general election," Alternative for Germany Co-Leader Alice Weidel told reporters, calling the result a "good day for Germany".
Industrial producer prices in the euro area dropped by 1.6% in March compared with February, reversing a modest 0.2% gain the prior month, as energy costs fell sharply, Eurostat said on Tuesday.
In the broader EU, factory prices also decreased by 1.6% on the month, following a 0.4% increase in February.
The decline was driven by a 5.8% plunge in energy prices in the euro area and a 5.5% drop in the EU. Excluding energy, prices edged up 0.1% and 0.2%, respectively.
The pound was quoted higher at USD1.3334 at midday on Tuesday in London, compared to USD1.3296 at the equities close on Friday. The euro stood lower at USD1.1316, against USD1.1341.
Against the yen, the dollar was trading down at JPY143.22 compared to JPY144.36.
Bluebird Mining Ventures was up 27% around midday on Tuesday.
The gold development company said two mineral production sharing agreements in the Philippines have been renewed by the Mines & Geosciences Bureau of the Environment & Natural Resources for a further two-year period, with effect from June 2.
This is a "major milestone", the firm said, with a key condition of the renewal being that a declaration of mining project feasibility is filed within the period. This declaration allows for production to begin.
Plus500 was one of the FTSE 250's winners, up 3.5%.
The contracts-for-difference trading platform provider said in a statement ahead of its annual general meeting on Tuesday morning that its "positive momentum" continued during the first quarter of 2025, bringing results for the three-month period ahead of market expectations.
Plus500 remains "confident" in its full-year outlook for 2025.
At the other end, Argentex slumped 92% ahead of its takeover by IFX (UK) Ltd, trading as IFX Payments, which was agreed at the end of April for GBP3 million.
The currency risk management group said on Tuesday it has agreed a GBP20 million revolving credit facility with IFX Payments, which is in addition to the prior GBP10.5 million bridge funding provided by IFX Payments.
The facility enables Argentex to draw down funds to meet margin calls from its liquidity providers, in case of further adverse foreign exchange movements. Shares were restored to trading on AIM on Tuesday morning, after their suspension on April 22 due to Argentex needing significant further liquidity support.
Argentex also on Tuesday said Chief Financial Officer Guy Rudolph has resigned, and will remain in post until the end of his six-month notice period. Non-executive Directors Henry Beckwith, Lord Digby Jones, Rina Ladva and Jeff Parker also resigned and left the board on Friday. This was further to Chief Executive Officer Jim Rudman's departure at the end of April.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.6%, the S&P 500 index 0.7% lower, and the Nasdaq Composite down 0.9%.
European Trade Commissioner Maros Sefcovic warned on Tuesday that the US might impose new tariffs on European exports, targeting up to 97% of exported goods.
In addition to an ongoing investigation on lumber, the US administration recently opened six further investigation to determine the effect of imports on national security, said Sefcovic.
The additional targeted sectors include pharmaceutical products, semiconductors, critical minerals, and trucks and truck parts, he said, addressing the European Parliament in the French city of Strasbourg.
If all these investigations lead to additional tariffs, 97% of EU exports to the US would be subject to import duties representing a trade volume of EUR549 billion, he said.
Brent oil was quoted up at USD61.63 a barrel at midday in London on Tuesday from USD61.07 late Friday.
Gold was quoted higher at USD3,376.71 an ounce against USD3,249.91.
Still to come on Tuesday's economic calendar, the US trade balance at 1330.
By Emily Parsons, Alliance News reporter
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