16th Oct 2013 09:57
LONDON (Alliance News) - UK stocks are trading lower Wednesday, breaking a four-day rally. With only one day remaining before the US government exhausts its borrowing authority, a solution on how to fund the government and raise the debt ceiling remains elusive to US politicians.
By mid-morning Wednesday the FTSE 100 is down 0.5% at 6,519.92, the FTSE 250 is down 0.8% at 15,011.08, and the AIM All-Share is down 0.3% at 788.37.
The personal goods sector is the heaviest faller, weighed down by Burberry, as investors remain unconvinced by incoming CEO Christopher Bailey. Burberry was the biggest blue-chip faller Tuesday following the announcement that current CEO Angela Ahrendts will step down next year. Burberry is the top faller again today, currently down 2.4%.
IMI leads the blue chip gainers. Shares are up 2.4%. The engineering group announced it would return GBP620 million to shareholders and top up its UK pension scheme after selling its beverage dispensing and merchandising business for USD1.1 billion. "Markets have been calling for this for a long time and have got what they wanted", says Jefferies analyst Andy Douglas said.
Fixed-line communications are the biggest gaining FTSE 350 sector, led higher by BT. The telecoms company, privatised by the government of 1984, trades up 0.6% after analysts at Goldman Sachs included the group on its 'Conviction Buy List'.
The current government's latest privatisation, Royal Mail, is experiencing its first headwind Wednesday. Shares in the 501-year-old institution are down 2.9% on the expectation that workers will announce a strike around the Christmas period. On Tuesday, Royal Mail confirmed that full-time staff each would receive 725 shares, worth GBP3,545 at Tuesday's close, in a effort to improve staff relations. Even so, results of a strike ballot are expected to result in the first walk-out in four years. The news may prompt some of the retail investors sitting on close to 40% profit after the first day of full trading to take profit on their holding.
There has been some positive sentiment around last night's football results that saw England beat Poland 2-0 at Wembley, confirming the team's place in the 2014 World Cup in Brazil.
Shares of retailer Sports Direct jumped in early trade, although they now have slipped slightly into negative territory, down 0.3%. ITV, which will televise some of the World Cup games, is up 1.3%.
The number of people in the UK claiming jobseeker's allowance plunged more than expected in September to the lowest since January 2009, data showed. Jobless claims declined 41,700 to 1.35 million, which was the lowest figure since January 2009, the Office for National Statistics reported. The headline rate of unemployment came it at 7.7%, in line with expectations.
Job seeker statistics have helped the pound regain some ground against the dollar. The pound now trades back above the 1.60 level at USD1.6026. The euro is fairly flat on the day against the dollar, currently at 1.3532.
European markets also are lower as the US debt clock ticks closer to deadline. Having both hit 2013 highs on Tuesday the French CAC40 is now down 0.7%, and the German DAX is down 0.1%.
With little left in the data schedule for the rest of the day, the main focus will undoubtedly be provided by any updates from Washington on raising the debt ceiling.
By Jon Darby; [email protected]; @jondarby100
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
BurberryBTSports DirectRMG.LITVIMI