(Alliance News) - Though London's leading stock index started the session in positive territory on Wednesday, it soon slipped into the red, weighed down by retailing constituent JD Sports Fashion and generally risk-off sentiment.
The FTSE 100 index was down 6.59 points, or 0.1%, at 7,207.17 at midday. The FTSE 250 was down 278.49 points, or 1.3%, at 20,502.60, and the AIM All-Share was 0.5% lower at 896.43.
The Cboe UK 100 was down 0.1% at 12,224.64, the Cboe UK 250 was down 1.3% at 18,481.94, and the Cboe Small Companies 0.2% lower at 11,365.69.
In European equities on Wednesday, the CAC 40 in Paris was down 0.2%, while the DAX 30 in Frankfurt was up 0.2%.
"Equities are still unable to get off the floor this morning, following from a mixed session in the US and Asia, where markets remain vulnerable to trade war headlines. The bounce yesterday ran out of steam, and overnight headlines pointing to more caution on a US-China deal have not helped either," said IG chief market analyst Chris Beauchamp.
He continued: "In the UK the big focus of course has been last night's seat projection from YouGov. Another herculean effort of polling analysis points towards a Conservative majority, although smaller than last time, and with such a wide range of outcomes highlighted by the MRP there is still all to play for. But for a market that was confidently predicting a comfortable Conservative majority, the news was a shock."
YouGov's MRP poll predicts the Conservatives are on course for a 28-seat majority – but the margin of error and unknown impact of tactical voting means a hung parliament is still a possibility.
A 28-seat majority would be the best Tory result since Margaret Thatcher's showing in 1987 – but it is down from the sizeable 68-seat victory that the same style poll had been predicting only two weeks ago.
YouGov's political research manager Chris Curtis said the margins are "extremely tight", which means the possibility of a hung parliament cannot be ruled out.
The pound was quoted at USD1.3152 at midday Wednesday, lower compared to USD1.3176 at the close on Tuesday but steadying after dipping to USD1.3106 overnight.
Elsewhere in currencies, the dollar was mixed against the euro and the yen ahead of the US Federal Reserve's monetary policy decision later in the day.
The euro stood at USD1.1084 at midday Wednesday, against USD1.1095 at the same time on Tuesday. Against the yen, the dollar was trading at JPY108.68 compared to JPY108.70 late Tuesday.
The Fed is expected to stand pat on interest rates this month following three cuts so far this year.
"The Fed has cut interest rates at each of the last three meetings and this one comes on the back of a knockout jobs report. Policy makers are thinking about Christmas shopping and parties not another rate cut and the odds fully support this," said Craig Erlam at Oanda.
The Fed will announce its latest policy decision at 1900 GMT, with Chair Jerome Powell holding his last press conference of the year at 1930 GMT.
Stocks in New York are seen mixed ahead of the Fed, with the Dow Jones seen down 0.1%, the S&P 500 index flat, and the Nasdaq Composite 0.1% higher.
In London, JD Sports Fashion was the biggest faller in the FTSE 100, down 10% at midday.
Brand management firm Pentland - which is JD's majority shareholder - has sold 24.0 million shares in the athleisurewear retailer, representing a 2.5% stake, at 740 pence each.
The shares were offered by way of an accelerated bookbuild to international institutional investors. Following the sale, Pentland will continue to be JD's majority shareholder, with a stake of 55%.
Meanwhile, gold miner Fresnillo was up 3.0%, tracking the price of the precious metal higher amid Wednesday's investor caution. Gold was quoted at USD1,466.91 an ounce, higher against USD1,463.59 at the close on Tuesday.
In other commodities, Brent oil was quoted at USD63.81 a barrel midday Wednesday, down from USD64.34 late Tuesday.
In the FTSE 250, Tullow Oil shares rose 6.8%, building on the previous session's 14% rise. However, the stock still remains down 66% since the week began after unveiling on Monday the suspension of its dividend, a "reset" of future production guidance, and the resignation of Chief Executive Officer Paul McDade.
Oilfield services firm John Wood Group was up 2.7% after Citigroup raised the stock to Buy from Neutral.
Elsewhere in London, AA was 13% higher as the roadside rescue firm confirmed that the positive operational momentum reported at the end of September has continued into the second half of its current financial year.
Following this positive performance, AA said it is planning a buyback or tender offer for its outstanding bonds.
M&C Saatchi was down 5.6% amid a raft of board departures, including co-founder Maurice Saatchi.
Non-Executive Directors Michael Dobbs, Michael Peat and Lorna Tilbian have all stepped down with immediate effect. Executive Director & Co-Founder Maurice Saatchi has also left.
Last week, M&C Saatchi warned annual profit was set to be well below the prior year. This was the firm's second such warning in the quarter.
By Lucy Heming; lucyheming@alliancenews.com
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