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(Alliance News) - Thursday morning's optimism was wearing thin by midday in London, as the Santa Rally fuelled by hopes of US rate cuts next year somewhat ran out of steam.
The FTSE 100 index was down 10.96 points, 0.1%, at 7,713.99. The FTSE 250 was down 42.24 points, 0.2%, at 19,678.51, and the AIM All-Share was up 0.80 of a point, 0.1%, at 763.83.
The Cboe UK 100 was down 0.2% at 770.01, the Cboe UK 250 was down 0.1% at 17,177.71, and the Cboe Small Companies was up 0.1% at 14,824.01.
The FTSE 100 swung into the red, as shares in housebuilders such as Barratt Developments, down 1.1%, and Berkeley, down 0.8%, weighed on London's large-cap index. Miners saw their strength in morning trade reverse, with Fresnillo down 0.6% and Endeavour down 1.0%.
It was a similar story on the continent, the CAC 40 in Paris was down 0.4%, while the DAX 40 in Frankfurt was down 0.2%.
In a quiet day for corporate updates in London, Corcel rose 16% on AIM.
The mining and mineral resource development company updated on the drilling results for the Tobias-14 well in the onshore block KON-11 in Angola, where it has a 20% working interest. The well encounters a full Binga reservoir section with identical zones as seen in the previous TO-13 well, with oil showing throughout.
Corcel and operator Sonangol believe the results "confirm the ability to reactivate production through an early production system and imply significant hydrocarbon potential remaining".
Corcel Executive Chair Antoine Karam commented: "The encouraging results of the TO-14 well constitute a significant milestone toward development of an EPS and providing line of sight to near-term revenue generation for Corcel."
Stocks in New York were called mixed. The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index marginally lower, and the Nasdaq Composite up 0.2%.
While the Santa Rally looks set to pause for some, the US indices have had a festive December, rising 6.3%, 5.0% and 5.7% respectively over the month. This is a result of now aggressively priced-in expectations of at least 150 basis points worth of interest rate cuts from the Federal Reserve next year.
The federal funds rate stands at a 22-year high of 5.25% to 5.5%, with market participants expecting this to fall to a range somewhere around 3.50% to 4.00% by next December, according to CME's FedWatch tool.
However, at its mid-December meeting, the Fed's own latest quarterly dot plot showed that most officials expect rates to be in a more conservative range of 4.4% to 4.9% by the end of the year.
In foreign exchange markets, the dollar gained ground against the pound after the British currency had crossed USD1.28 earlier in the day. However, it eased against the yen and the euro.
Sterling was quoted at USD1.2796 at midday in London on Thursday, slightly below USD1.2797 at the London equities close on Wednesday. Against the yen, the dollar was quoted at JPY140.70, down versus JPY141.88. The euro traded at USD1.1126, rising from USD1.1115.
Gold was quoted at USD2,076.36 an ounce, lower than USD2,080.29.
Meanwhile, oil prices retreated as shipping disruption in the Red Sea eased. Brent crude fetched USD78.43 a barrel early Thursday, lower than USD80.15 late Wednesday.
French shipping company CMA-CGM has resumed some transit through the Red Sea, days after Danish group Maersk announced it would return as a US-led naval coalition is now policing the maritime route against Yemeni rebel attacks. The attacks prompted shipping companies to reroute vessels around the southern tip of Africa earlier this month – a longer and more expensive trip than the Red Sea route that links up with the Suez Canal.
"However, tensions remain elevated, with Middle Eastern leaders warning about the conflict widening, with Israel's border with Lebanon, a worrisome hotspot, following attacks by Hezbollah. So, crude prices are staying largely elevated, especially with the US economy showing signs of resilience, boosting the outlook for global demand," considered Susannah Streeter, head of money & markets at Hargreaves Lansdown.
Still to come on Thursday's economic calendar, there are the latest US jobless claims data at 1330 GMT.
According to FXStreet, the data is expected to show that initial jobless claims rose to 210,000 in the week ended December 22, from 205,000 the prior week. This would suggest a moderate cooling in the labour market, which has so far proved resilient in the face of historically high interest rates.
Next week will bring more data that will provide crucial insights into the health of the US jobs market, with the JOLTS print and ADP payrolls survey due on Wednesday. The non-farm payrolls print follows on Friday, with the unemployment rate and wage growth figures for December.
By Elizabeth Winter, Alliance News deputy news editor
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