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(Alliance News) - London's FTSE 100 edged lower early Wednesday as the threat of rampant inflation, the prospect of tighter monetary policy, and the spread of the Omicron variant made for nervous trading ahead of key central bank monetary policy meetings this week.
Stock indices in Frankfurt and Paris registered early climbs, however.
The US Federal Reserve kicks off the central bank bonanza later on Wednesday. The Bank of England and European Central Bank follow on Thursday.
"Investor apprehension is growing as rising prices, a fast-spreading Omicron variant and a likely hardening of the Federal Reserve's attitude to monetary tightening all conspire to undermine sentiment," interactive investor analyst Richard Hunter commented.
The FTSE 100 index was down 15.45 points, or 0.2%, at 7,203.19 early Wednesday. The mid-cap FTSE 250 index inched up 17.41 points, or 0.1%, at 22,568.10. The AIM All-Share index was up 1.12 points, 0.1%, at 1,165.79.
The Cboe UK 100 index was down 0.3% at 714.37. The Cboe 250 was marginally lower at 19,977.10, while the Cboe Small Companies was marginally lower at 14,792.54.
In mainland Europe, the CAC 40 stock index in Paris was up 0.6%, while the DAX 40 in Frankfurt was 0.5% higher.
Inflation in the UK raced above 5% in November, numbers on Wednesday showed.
The UK's annual inflation rate accelerated to 5.1% in November, from 4.2% in October, according to the Office for National Statistics. The Bank of England's inflation target is 2%.
November's figure was above market estimates of 4.7%, according to FXStreet.
"A significantly higher than expected inflation reading puts the Bank of England on the horns of a dilemma," ii's Hunter said.
The 5.1% figure would usually mean an interest rate hike was on the way, Hunter added, though the emergence of the Omicron variant "has thrown the UK's growth trajectory into doubt". The BoE targets 2% inflation.
The analyst added: "On balance, the market is still pricing in no change until the following meeting in February, although this inflation number could make the decision a closer call than had been expected."
The pound was quoted at USD1.3270 early Wednesday following the CPI data, up markedly from USD1.3231 at the London equities close on Tuesday.
The euro stood at USD1.1272, down slightly from USD1.1275. Against the yen, the dollar was trading at JPY113.64, down from JPY113.70.
On the London Stock Exchange, Cineworld tumbled 24% in early trade, the worst mid-cap performer.
The movie house operator said a Canadian court has ruled against it in the case brought by jilted takeover target Cineplex.
The court has ordered Cineworld to pay to Cineplex CAD1.23 billion, about GBP720 million, in lost synergies and CAD5.5 million in transaction costs.
Cineworld said it will appeal the judgement and no damages will be payable during appeal. Cineworld had agreed to the acquisition before the Covid-19 pandemic and cancelled it as lockdowns closed cinemas.
Electrical goods retailer Currys fell 10% as it warned its market has been "softer" in recent weeks.
In the half year to October 30, revenue fell 1.5% annually to GBP4.79 billion from GBP4.86 billion. Pretax profit, however, inched up 6.7% to GBP48 million from GBP45 million, helped by net finance costs dropping 15% to GBP47 million.
"We've had a strong first half of the year. We grew colleague engagement and customer satisfaction, gained market share and stabilised gross margins in the UK, grew profits and generated strong cash flow," Chief Executive Alex Baldock said.
Baldock added, however: "Our market has been softer over recent weeks, and we may face into further headwinds from omicron and associated restrictions, but the stronger business we've built can ride out both the industry-wide disruption to supply chains and bumpy demand."
Currys declared an interim payout of 1.00 pence per share, having not paid one a year earlier.
An increased dividend, along with a return of surplus cash and a pledge to invest in the business, are among its "refreshed capital allocation priorities".
Currys also will begin a planned GBP75 million buyback next year.
DCC was the best large-cap performer, meanwhile, up 6.7%.
The Dublin-based sales, marketing and support services firm unveiled the acquisition of Almo, its largest to date at an enterprise value of USD610 million.
Almo is a US sales, marketing and distribution business which operates in fields such a consumer electronics, appliances and lifestyle products.
Almo was bought in a bilateral deal with the Chaiken family, who have owned and managed the company since it formed 75 years ago.
"Almo will continue to be led by its current CEO, Warren Chaiken. His experienced and ambitious management team, which has a track record of delivering strong organic and acquisitive profit growth, will also continue with the business. DCC Technology's existing Pro AV operations in North America will be combined with Almo to create the leading specialist Pro AV business in the market," DCC said.
Avon Protection tumbled 15%, as strife at its body armour unit continues to overshadow the protection equipment company.
Avon said revenue in the financial year that ended September 30 rose 16% to USD248.3 million from USD213.6 million. It swung to a pretax loss of USD35.6 million from a USD2.2 million profit. It reported an asset impairment of USD46.8 million related to its armour business.
The company lifted its payout by 30% to 44.9 cents, from 34.5 cents.
In November, Avon had said its Vital Torso Protection Enhanced Small Arms Protective Inserts plates encountered a failure in first article testing, which will significantly delay the likely approval timetable for the product.
It also has suffered further delays in obtaining final product approvals for the US Defense Logistics Agency Enhanced Small Arms Protective Inserts body armour plates.
Tokyo's Nikkei 225 inched up 0.1% at the close. The Shanghai Composite ended down 0.4%, while the Hang Seng in Hong Kong closed 0.9% lower. The S&P/ASX 200 in Sydney fell 0.7%.
Gold stood at USD1,769.56 an ounce early Wednesday, down from USD1,775.45 late Tuesday. Brent oil was quoted at USD73.18 a barrel, down marginally from USD73.23.
Still to come on Wednesday are US retail sales numbers at 1330 GMT.
By Eric Cunha; ericcunha@alliancenews.com
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