14th Mar 2014 10:51
LONDON (Alliance News) - Stock indices are lower across Europe once again Friday, with the UK's leading index in the red for the sixth consecutive day, as a lack of top-tier economic data and a quiet corporate calendar leaves investors focused on the ramping up of tensions between Russia, Ukraine, and the West.
By mid-morning Friday, the FTSE 100 is down 0.2% at 6,540.69, the FTSE 250 is down 0.7% at 16,074.57, and the AIM All-Share is down 0.8% at 872.31.
US Secretary of State John Kerry landed in London for a meeting with his Russian counterpart Sergey Lavrov to try to dissuade Russia from going ahead with a planned referendum on Sunday that will ask residents of the Crimea if they want to be part Russia instead of Ukraine.
German Chancellor Angela Merkel, the Western European politician with both the most influence and the most to lose from the problems in Eastern Europe, has begun to step up her rhetoric. Most recently reiterating Berlin's position that "the territorial integrity of Ukraine cannot be overridden", Merkel has ruled out military force, but warned that the crisis could cause "massive damage to Russia, economically and politically".
The German DAX 30 index has seen particularly heavy selling, down 4.0% since Monday, as Germany has particularly strong trade links with Russia - importing one-third of its oil and gas from the country, for example. The Committee on Eastern European Economic Relations, a lobby group representing big businesses in German, says that 300,000 German jobs depend on trade with Russia, 6,200 companies with German owners are active in Russia, and German companies have invested EUR20 billion there, according to an article in Friday's Economist magazine.
Major European equity markets lower Friday, with the DAX 30 down 0.4% and the CAC 40 down 0.5%.
Meanwhile, consumer prices in Germany were confirmed as growing at 1.2% year-on-year in February, slightly slower than the 1.3% growth recorded in January. On a monthly basis, CPI was confirmed at 0.5%, up the 0.6% drop in January.
The number of people employed in the Eurozone increased for the first time since the second-quarter of 2011, according to the latest employment change data from Eurostat. The index recorded a 0.1% gain in the fourth-quarter of 2013, up from flat in the third-quarter.
The European data has helped the euro recover some its losses from last night that followed comments from European Central Bank President Mario Draghi. Draghi talked the euro lower by saying that additional policy steps may still be necessary by the ECB. The central banker said that the strength of the single currency is becoming of increasing importance with regard to price stability. The euro fell to a low against the dollar of USD1.3840 and now trades at USD1.3885.
The pound is flat on the day against the dollar, currently trading at USD1.6610. Sterling is holding its ground despite the UK total trade balance recording a significant deficit of GBP2.565 billion in January, increasing from GBP0.668 billion in December.
A quiet corporate calendar has provided few stand-out movers within UK equities. Sainsbury's is the biggest FTSE 100 gainer, up 3.0%, rebounding after an 8.5% fall on Thursday after Morrisons joined the UK supermarket price war, leading to heavy falls across the sector.
Against the backdrop of rising geopolitical tensions, emerging markets-focused Aberdeen Asset Management is the biggest blue chip faller, down 2.3%.
Wetherspoon reported 5.5% like-for-like sales growth in its first half, but also highlighted pressure on margins. The pub chain's margins may be squeezed further by this week's announcement that the UK minimum wage will rise by 16p, to GBP6.50 per hour. Shares are down 1.9%.
Online fashion retailer Boohoo.com started unconditional dealings Friday at a large premium to its offer price, after it became the fifth UK retailer to float on the London Stock Exchange so far this year. The company's shares currently trade at 77 pence, up 54% from the IPO price of 50p.
Still to come Friday, US producer prices at 1230 GMT, followed by the Reuters/Michigan Consumer Sentiment Index at 1355 GMT. Following the slightly stronger that expected US retail sales on Thursday, sentiment is expected to have improved slightly, with economists forecasting a March reading of 82.0, up from 81.6 in February.
Ahead of the data, futures trading suggests that the major US markets will buck the down trend in Europe and all open about 0.2% higher.
By Jon Darby; [email protected]; @jondarby100
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