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(Alliance News) - European markets fell at the start of trade on Tuesday, with investors bracing for some downbeat PMI readings amid worries over inflation, rising interest rates and energy supply woes.
The FTSE 100 index was down 33.43 points, or 0.4%, at 7,500.36 early Tuesday. The mid-cap FTSE 250 index was down 15.57 points, or 0.1%, at 19,483.77. The AIM All-Share index was down 1.39 points, or 0.2%, at 905.89.
The Cboe UK 100 index was down 0.4% at 749.12. The Cboe 250 was down 0.2% at 16,785.62, and the Cboe Small Companies flat at 14,179.71.
In mainland Europe, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.1% early Tuesday.
The mood was sour ahead of a raft of European PMIs.
Eurozone purchasing managers' index readings are out at 0900 BST and the same for the UK is due at 0930 BST. A preliminary consumer confidence reading for the eurozone is released by the European Commission at 1500 BST.
"Focus in the euro area today will be firmly on August sentiment indicators, including the flash PMIs and Commission consumer confidence index, for further insight to the risks that the economy is now slipping into recession. Given concerns about high inflation, supply disruptions, rising interest rates and slowing global demand, the PMIs seem likely to signal a further weakening in conditions in August," said Daiwa Capital Markets.
The UK's PMI is likely to flag recession risks, Daiwa added. Consensus, according to FXStreet, sees the UK composite output index for August falling to 51.1 from 52.1 in July.
The euro slipped further below parity with the dollar, trading at USD0.9927 early Tuesday from USD0.9964 late Monday.
Sterling also was weaker, quoted at USD1.1757 early Tuesday from USD1.1787 at the London equities close on Monday.
As well as recession worries, Europe was troubled by energy supply concerns, after Russian energy supplier Gazprom said gas deliveries through the Nord Stream pipeline will cease from August 31 to September 2 for "maintenance".
"It is necessary to carry out maintenance every 1,000 hours" of operation, Gazprom said in a statement. As a result, "gas transportation through the Nord Stream pipeline will be suspended for three days".
News of the decision risks reviving fears of shortages in Europe, which has already accused Moscow of energy blackmail.
Brent oil prices were higher Tuesday morning, adding to inflation worries. A barrel was trading at USD97.34, up from USD93.26 late Monday.
In a quiet morning for UK company news, BT shares were towards the top of the FTSE 100, up 1.3%, after the UK government said no further action will be taken in relation to Altice Europe's move in December to raise its stake in the London-listed telecoms firm to 18% from 12%.
At the bottom of the FTSE 250 in opening trade was John Wood Group, down 4.4% at 143.41 pence, having earlier dropped to a new 12-month low of 131.43p.
The engineering and consulting firm reported a widened interim loss as revenue stalled, and said cash generation is its "top priority" going forward.
Revenue for the six months to June 30 edged 0.4% lower to USD2.56 billion from USD2.57 billion a year before. However, the engineering and consulting firm's pretax loss nearly doubled to USD31.5 million from USD18.4 million as finance expenses rose 19% to USD64.1 million from USD53.9 million.
"The strong order book gives me confidence for the future but there is a lot more to do on cash generation and this is our top priority," said Chief Executive Ken Gilmartin.
The company suffered free cash outflow of USD363 million, which included a working capital outflow of USD208 million and exceptional cash costs of USD102 million.
Given its "current elevated levels of debt", John Wood will not recommend any dividends in relation to 2022. The firm will reconsider this in 2023 as the sale of the Built Environment Consulting business promises to "transform" the balance sheet. The division was sold to WSP Global for USD1.9 billion back in June. Net debt including leases was USD2.16 billion on June 30, up from USD1.78 billion a year before.
Elsewhere in London, shares in Halfords were down 3.3% after Panmure downgrade the cycling and motor parts retailer to 'hold' from 'buy'.
Shares in Alba Minerals rose 17% on AIM after revealing it has agreed to take full ownership of the Clogau gold project in Wales. It will buy the remaining 10% of the project it doesn't already own.
Alba has also agreed to buy back a 3% net smelter return royalty owned by the vendor, reducing its royalty to 1%.
"It is a measure of our confidence in the long-term prospects for the Clogau gold project that we have taken the opportunity to move to 100% ownership of the project," said Executive Chair George Frangeskides.
Shares in RM dropped 31% after the company skipped its interim dividend, reported a swing to loss, and warned on profit in the short-term.
RM swung to a pretax loss of GBP7.2 million in the six months to May 31 from a profit of GBP2.9 million a year before. Operating expenses jumped 38% to GBP40.6 million from GBP29.4 million, but revenue grew by just 4.4% to GBP100.3 million from GBP96.1 million.
Looking ahead, the company warned of challenging headwinds, such as inflation and high energy costs. RM said that IT implementation coupled with the macroeconomic challenges will "dilute" profit conversion in the short-term.
Against the yen, the dollar was quoted at JPY137.29 early Tuesday in London, flat versus JPY137.26.
In Asia on Tuesday, the Japanese Nikkei 225 index ended down 1.2%. In China, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong was down 1.2%. The S&P/ASX 200 in Sydney closed down 1.2%.
Japan's private sector is expected to suffer its first drop in activity in six months, survey results from S&P Global showed Tuesday, as both services and manufacturing firms suffered setbacks.
The au Jibun Bank flash Japan composite PMI fell to 48.9 points in August from the final score of 50.2 in July. Any reading below the neutral 50.0-point mark indicates a contraction.
Gold was quoted at USD1,735.51 an ounce early Tuesday, down slightly against USD1,736.39 on Monday.
By Lucy Heming; lucyheming@alliancenews.com
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