8th Aug 2014 09:38
LONDON (Alliance News) - UK share prices are trading lower Friday, with the FTSE 100 coming under significant selling pressure for the third consecutive day as rising geopolitical tensions continue to dominate the investment backdrop, boosting safe-haven assets and hurting equity values.
By mid-morning Friday the FTSE 100 is down 0.8% at 6,546.52, the FTSE 250 down 0.7% at 15,146.55, and the AIM All-share off 0.5% at 746.75.
Major European markets also are suffering, with the French CAC 40 down 0.5% and the German DAX down 1.0%.
Global markets barely had time to digest the news that Russia has banned all food imports from countries involved with the sanctions against it before sentiment took another knock when the US authorised airstrikes in Iraq which, if necessary, will attempt to stop the march of Islamic militants across the north of the country.
Add the cease-fire between Israel and Hamas ending without resolution and the World Health Organisation declaring a global emergency due to the Ebola outbreak, and you get some very cautious investors, in no mood to add to risk positions ahead of the weekend.
Safe-haven demand pushed the gold price up overnight to its highest level in three weeks of USD1,322.69 per ounce. The precious metal has softened a little but continues to be quoted towards the upper end of its recent range, currently USD1,316.90.
Brent oil also has jumped higher, given the potential for disruption if the US starts military operations in northern Iraq. Brent peaked at USD106.82 per barrel overnight, and continues to trade at elevated levels, currently USD106.22 per barrel.
The benefit that the shares of the UK-listed oil and gas producers might have seen from a higher oil price has been trumped by the possibility of disruption to operations in Iraq.
Afren leads the FTSE 250 fallers, down 4.5% after making the decision to suspend operations at the Barda Rash field in the Kurdistan region of northern Iraq, although it has said it doesn't expect a significant hit to its cash flow. Gulf Keystone Petroleum, which also operates in the area, is a heavy faller for the second consecutive day, down almost 5% due to disruption fears.
The gold miners are providing a little support, with Fresnillo leading the FTSE 100 gainers, up 2.4%, Polymetal International up 1.8%, Centamin up 1.0%, and African Barrick Gold up 0.7%.
Catlin Group leads FTSE 250 gainers, up 4.4% after the insurer said its first-half pretax profit more than doubled to USD318.0 million in the first half, up from USD145.0 million in the previous year, boosted by an improved underwriting performance.
UK trade balance data, released earlier Friday, also has been unhelpful for UK investor sentiment, and for the pound. The UK goods trade deficit expanded to GBP9.4 billion in June from GBP9.15 billion in May. Economists had expected the deficit to come down a little to GBP8.8 billion.
In the currency market, the pound has slipped below USD1.68 for the first time in four weeks, reaching a low of USD1.6792. The euro trades a little higher against the dollar at USD1.3385, while safe-haven flow also has boosted the Japanese yen, which trades at USD101.71.
Over the last couple of session the FTSE 100 has been lifted a little in the afternoon by a better start to trading in the US. However the US data calendar looks very light Friday, and a higher open is currently looking unlikely. Futures trading indicates that that the DJIA and the S&P 500 will both open about 0.3% lower.
By Jon Darby; [email protected]; @jondarby100
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