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(Alliance News) - The FTSE 100 continued to tumble as Wednesday's session progressed, shedding over 140 points by midday as the previous day's downbeat US manufacturing data continued to reverberate in the markets.
The FTSE 100 index was down 144.74 points, or 2.0%, at 7,215.58 Wednesday. The FTSE 250 was down 237.65 points, or 1.2%, at 19,635.17. The AIM All-Share was down 0.3% at 872.06.
The Cboe UK 100 index was down 2.0% at 12,241.32. The Cboe UK 250 was down 1.2% at 17,564.13 and the Cboe UK Small Companies down 0.2% at 10,928.86.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 1.6% and 1.3% respectively in early afternoon trade.
"The risk-off atmosphere created by yesterday's US ISM miss continues to hang over markets," said Chris Beauchamp, chief market analyst at IG. "European equities have turned firmly lower in early trading, on the very reasonable assumption that, if things are that bad for the US, then they must be even worse for Europe."
Compounding this recent poor data for London shares, figures from IHS Markit earlier on Wednesday showed UK construction output remained firmly in contraction in September.
The headline PMI posted 43.3 in September, down from 45.0 in August. The reading, further below the neutral mark of 50, signals the building sector suffered an even more severe downturn in September than was seen the previous month.
Consensus, according to FXStreet, was for the reading to remain unchanged at 45.0 in September.
"A drop in the UK construction PMI has meant that housebuilders are not immune from the carnage, while growth stocks such as miners are taking the brunt of the selling. Investors now hope that ADP numbers this afternoon can offer some relief from the general bearishness that has overtaken markets in the past 24 hours," said IG's Beauchamp.
US ADP employment is out at 1315 BST ahead of Friday's eagerly-awaited non-farm payrolls report. FXStreet consensus for the ADP data foresees 140,000 jobs being added in the US in September, lower than the 195,000 recorded in August.
Ahead of the data, stocks in the US are pointed to a lower start, with the Dow Jones and S&P 500 both seen down 0.6% and the Nasdaq called off 0.7%. The indices lost more than 1% on Tuesday.
In the UK, attention lies on Manchester where Prime Minister Boris Johnson will set out his plans for a Brexit deal at the Conservative Party's annual conference.
Johnson will use his speech at the Conservative Party Conference to say "we can, we must and we will" get Brexit done because voters feel they are being "taken for fools" by Westminster's politicians.
It has also been reported Johnson will unveil a "two borders for four years" plan on Wednesday that will leave Northern Ireland in a relationship with Europe until 2025, according to The Daily Telegraph.
However, Ireland's deputy prime minister, Simon Coveney, speaking late on Tuesday night, said this was "no basis for an agreement" and "concerning to say the least".
Johnson is avoiding Wednesday's regular session of Prime Minster's Questions to deliver his conference speech after MPs refused to vote for a Commons recess for the Tory gathering.
The pound was quoted at USD1.2261 at midday on Wednesday, firm versus USD1.2251 late Tuesday.
In London, housebuilders were lower following the anaemic UK construction data released in the morning.
Taylor Wimpey was down 3.5%, Barratt Developments 3.3% lower and Berkeley Group Holdings 2.4% lower.
This was offsetting a 19% rise for Flutter Entertainment on news of a GBP10 billion tie-up with SkyBet owner The Stars Group.
Under the agreement, expected to be completed in the second or third quarter of 2020, TSG shareholders will be able to receive 0.2253 of a Flutter share for each Toronto-listed TSG share held. Flutter shareholders will own 55% and TSG 45% of the combined firm, which will have a market capitalisation of over GBP10 billion, based on the two firms' current values.
On a proforma basis, the combined group's annual revenue would have been GBP3.8 billion in 2018, making it the largest online betting and gaming operator globally.
This is not Flutter's first bet on a major gambling tie-up. Flutter in 2015 - then known as Paddy Power - agreed to merge with Betfair in an all-share deal which completed in 2016. In May this year, Paddy Power Betfair changed its name to Flutter.
"While the UK and Australia will remain core markets, assuming the merger goes through the biggest opportunity is sports betting in the US. The rationale being that increased scale will help create a stronger competitive position," said Russ Mould, investment director at AJ Bell.
"Regulatory pressures are increasing in most markets and the opening up of sports betting in the US is seen as a major source of growth for the industry," he explained.
In the FTSE 250, traders responded positively to news defence firm QinetiQ has ramped up its US operations by acquiring a sensing solutions firm for up to USD125 million. The stock was up 5.5%.
QinetiQ will pay an initial USD105 million in cash for Manufacturing Techniques Inc, or MTEQ. A further USD20 million will be paid in cash or shares and subject to the unit delivering financial targets over three years.
In the year to August 31, MTEQ generated revenue of USD167.4 million and has delivered double-digit revenue growth over the past three financial years, QinetiQ said.
Shares in Metro Bank were 6.5% higher on news founder Vernon Hill will step down as chair before the end of December.
The UK challenger bank, known for its high street branches, added that the search for a new chair is "progressing well" but explained that should a replacement not be found by the end of the year, an existing non-executive director will assume the role on an interim basis.
By Lucy Heming; lucyheming@alliancenews.com
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