7th Oct 2014 10:03
LONDON (Alliance News) - UK stocks have slumped Tuesday, as investors cut back risk positions ahead of Wednesday's Federal Reserve minutes release and Thursday's Bank of England interest rate decision.
The FTSE 100 trades 0.7% lower at 6,520.43, the FTSE 250 is down 0.9% at 15,137.13, and the AIM All-Share index is off 0.4% at 737.87.
European equity markets also are lower, with the CAC 40 in Paris down 1.2% and the DAX in Frankfurt down 1.0%.
Miners are providing support to the blue-chip index again with the FTSE 350 mining sector index rising 1.6%. Rio Tinto, up 4.9%, is the biggest riser after the mining giant rejected a merger proposal from Glencore, saying it was not in the best interest for its shareholders. "The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter," Rio Tinto said in a statement. Glencore shares trade down 1.2%.
Schroders, meanwhile, has been hit with a ratings downgrade to Underperform from Buy by analysts at Bank of America Merrill Lynch, with a price target cut to 2,400.00 pence from 2,800.00p. The downgrade is due to concerns over the impact on profit margins of potential new regulation in the eurozone. The stock is one of the biggest fallers in the FTSE 100, trading down 3.8% at 2,261.00p.
In the FTSE 250, Cairn Energy is the best performing stock, with its shares gaining 9%. The company said that oil has been discovered in an exploration well offshore Senegal in which it has a 40% working interest. Cairn said it thinks the well may have significant potential as a standalone discovery, and also raises the potential of the wider block.
Meanwhile, Spirent Communications' shares have fallen by 19% after issuing a warning on profit and revenue, hit by deteriorating trading conditions. The company is comfortably the biggest faller in the mid-cap index.
UK industrial production for August showed a 2.5% rise from the previous year. The figure marginally missed economists forecast of a 2.6% increase, but outperformed July's reading of a 2.2% rise. However, on a month-on-month basis, industrial production came in flat, meeting expectations.
UK manufacturing production in August accelerated by more than the consensus. The year-on-year figure showed a growth of 3.9%, beating expectations of a 3.4% rise, and July's growth of 3.5%. Manufacturing output rose 0.1% in August on a monthly basis, meeting expectations, but below July's print of a 0.3% rise.
Berenberg's chief UK economist says that the negligible growth in UK manufacturing could be down to the risks caused by the tension between Ukraine and Russia.
"Ukraine and Russia are of little direct importance to UK exporters. Indeed, they are of limited direct importance to German manufacturers. But the manufacturing cycle is highly integrated across countries. That means the decline in business confidence and German manufacturing output triggered by Russia?s aggression in Eastern Ukraine will continue to spread to the UK over the second half of the year," Wood says.
Still to come Tuesday is the US's Johnson Redbook index for last week at 1355 BST, before US consumer credit after the close of European trade at 2000 BST.
Futures indicate a lower opening for Wall Street, with the DJIA shown to be down 0.6, while the S&P 500 and the Nasdaq Composite are both shown opening down 0.6%.
By Neil Thakrar; [email protected]
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
SchrodersSpirentRio TintoCapricorn Energy PLCGlencore