(Alliance News) - Stocks in London closed in the red on Tuesday, with market nerves frayed ahead of the release of key UK inflation data on Wednesday morning.
"All eyes will be on tomorrow's inflation numbers, with Bank of England policymakers praying that we start to see rapid slowdowns in how fast prices are rising before the end of the summer," said Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 index closed down 19.17 points, or 0.3% at 7,569.31 on Tuesday. The FTSE 250 ended down 108.13 points, or 0.6%, at 18,746.16. The AIM All-Share closed down 4.35 points, or 0.6%, at 785.18.
The Cboe UK 100 ended down 0.3% at 754.62, the Cboe UK 250 closed down 0.5% at 16,434.80, and the Cboe Small Companies ended down 0.3% at 13,207.39.
According to FXStreet, the UK's annual inflation rate is expected to cool to 8.4% in May from 8.7% in April. Core inflation is expected to remain stable at 6.8%.
The data comes ahead of an interest rate decision from the Bank of England on Thursday. The central bank is widely expected to lift rates by another 25 basis points, amid high and sticky inflation in the UK.
Sterling slipped as the decision loomed closer. The pound was quoted at USD1.2743 at the London equities close on Tuesday, down from USD1.2797 at the close on Monday.
The euro stood at USD1.0909, lower against USD1.0928 on Monday.
Ricardo Evangelista, senior analyst at ActivTrades, said that while the dollar was on the up against the euro and pound on Tuesday, it may struggle in the days to come.
"With the [European Central Bank] and [Bank of England] looking set to continue to hike rates, there will be an upside for the respective currencies in relation to the greenback," Evangelista said.
"Caught between the forces of the haven trade and the downside created by the Fed's pause, while other major central banks are still hiking, the dollar is likely to remain stuck within a narrow range in the short term."
Against the yen, the dollar was trading at JPY141.26 late Tuesday, lower compared to JPY141.85 late Monday.
In London, abrdn lost 0.6% after it announced that it no longer has a stake in HDFC Asset Management.
The investor said its subsidiary, abrdn Investment Management, sold 21.8 million HDFC AMC shares on the National Stock Exchange of India and the Bombay Stock Exchange at an average price of INR1,873, around GBP17.85.
aIML will receive about INR35.47 billion, around GBP337 million, from the sale.
Frasers closed flat on Tuesday. The firm continued its streak of buying up shares in UK retail outfits, with regulatory filings showing it has taken up a position in boohoo and Currys.
Frasers now owns 5.0% of online fashion retailer boohoo and has built an 8.9% stake in electronics and electrical goods retailer Currys.
On Friday, online electricals retailer AO World said Frasers increased its stake to 21% from 19%. The day prior, London-based online fashion retailer Asos said Frasers increased its stake to 10.6% from 9.9%.
interactive investor analyst Victoria Scholar said: "These deals are part of Frasers' broader intelligent strategy to acquire and build stakes in other businesses with the goal of positioning itself as a consumer platform for the world's best brands to provide 'a world-leading retail ecosystem'. Electricals and white goods could become key components of Frasers' expansion plans."
Shares in boohoo and Asos closed down 1.9% and 3.5%, respectively, while shares in Currys and AO World rose added 2.9% and 1.2%, respectively.
Elsewhere in London, Lookers surged 34%, closing at 118.55 pence, after it said it has agreed to be bought out by Canadian motor dealer in a GBP465 million deal.
Alpha Auto Group, an operator of auto retail dealerships across North America, will pay 120p per Lookers share.
The offer is a 35% premium to the closing price of 88.7p on Monday.
The board of Lookers said they believe the offer represents a "compelling proposition" for the firm's shareholders. It will unanimously recommend the offer at an upcoming court meeting and general meeting.
On AIM, Best of the Best dropped 6.8%, closing at 517.55p, after it announced it received a takeover offer from Globe Invest, valuing the firm at around GBP45.3 million.
Globe Invest is a single-family office and investment holding company of Teddy Sagi, and holds around a 30% stake in BOTB.
BOTB is a London-based operator of weekly online raffle competitions. Globe Invest is seeking to acquire the remaining stake it does not already own in BOTB for 535p per share.
The price represents a 34% premium to the price paid by Globe Invest to acquire its initial 30% stake in BOTB back in September, but a 3.6% discount to BOTB's closing price of 555p on Monday.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt ended down 0.6%.
Wall Street was lower at the London equities close, with markets returning from their long weekend for the Juneteenth holiday.
The Dow Jones Industrial Average was down 0.9%, the S&P 500 index down 0.7%, and the Nasdaq Composite down 0.6%.
Brent oil was quoted at USD74.86 a barrel at the London equities close on Tuesday, down from USD76.02 late Monday. Gold was quoted at USD1,935.21 an ounce, sharply lower against USD1,952.97.
In Wednesday's UK corporate calendar, there are full-year results from Halfords, Esken and Berkeley.
The economic calendar has UK consumer and producer price inflation data at 0700 BST as well as UK house price data at 0930 BST.
By Heather Rydings, Alliance News senior economics reporter
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