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(Alliance News) -Â London stocks were unable to sustain the morning's gains by midday on Wednesday, while the pound softened ahead of the UK's spending review.
As well as the chancellor's review, focus in the afternoon lies on a slew of US data due ahead of the Thanksgiving break.
The FTSE 100 index was down 36.58 points, or 0.6%, at 6,395.59 Wednesday midday. The mid-cap FTSE 250 index was down 204.05 points, or 1.0%, at 19,585.51. The AIM All-Share index was flat at 1,032.20.
The Cboe UK 100 index was down 0.5% at 636.63. The Cboe 250 was down 1.3% at 16,966.01, and the Cboe Small Companies down 0.1% at 11,519.08
In mainland Europe, the CAC 40 in Paris was down 0.1% while the DAX 30 in Frankfurt was 0.3% lower early Wednesday afternoon.
"European markets are largely treading water this morning, with recent vaccine-led gains starting to fade once again," said Joshua Mahony, senior market analyst at IG.
Wall Street is on course for a mixed open, with the Dow Jones and S&P 500 both pointed down 0.2% but the Nasdaq set for a 0.2% rise.
Markets are looking to a raft of US economic data due in the afternoon amid a pre-Thanksgiving lull.
US markets will be shut on Thursday for Thanksgiving, re-opening for an abbreviated session on Friday.
Initial jobless claims data from the US will be released at 1330 GMT on Wednesday, a day earlier than usual due to the holiday on Thursday. At the same time is a GDP reading and personal consumption expenditures.
"In the short term, markets may struggle to push on meaningfully from here ahead of tomorrow's Thanksgiving holiday in the US, with a further uplift in month-end selling pressure now expected after yesterday's significant equity move relative to bonds. Of course, year-end considerations need to be factored in as investors will turn profit and loss defensive during December," said Axi's Stephen Innes.
In focus in the UK on Wednesday, meanwhile, is the chancellor's spending review.
In his Commons statement at around 1230 GMT on Wednesday, Chancellor Rishi Sunak will announce the launch of a three-year 'restart' programme, worth GBP2.9 billion, which will help more than a million unemployed people get back into work in the wake of the pandemic.
Unusually, because of the economic uncertainty caused by the virus, most UK government departments will receive only a one-year spending allocation rather than the usual multi-year settlement.
Other commitments are expected to include GBP3 billion more to support the NHS, including GBP1 billion to address the treatment backlogs built up while it was dealing with the Covid-19 crisis.
Sunak's review comes a week after figures showed the UK's debt-to-gross domestic product ratio reached 100.8% - levels not seen since the early 1960s. Total public sector net debt, excluding public sector banks, rose by GBP276.3 billion in the first seven months of the financial year to reach GBP2.076 trillion at the end of October, or around 100.8% of UK GDP.
IG's Mahony commented: "Thus today’s announcement is likely to be very jobs focused, with Sunak seeking to minimise the repercussions of a March end to the furlough scheme."
Sterling was quoted at USD1.3326 midday Wednesday ahead of the spending review, down from USD1.3357 at the London equities close on Tuesday.
The euro traded at USD1.1886 on Wednesday, flat against USD1.1882 late Tuesday. Against the yen, the dollar eased to JPY104.49 from JPY104.62.
Gold was quoted at USD1,810.56 an ounce, up on USD1,805.23. Brent oil was trading at USD48.51 a barrel, higher than USD47.68 late Tuesday.
In London, share price gains for Melrose Industries were unable to keep the FTSE 100 in the green by midday.
Melrose, shares up 4.4%, said it is currently trading at the top end of its expectations for 2020.
Melrose, which specialises in buying and improving underperforming businesses, said its performance in the four months to the end of October reflected a faster-than-expected recovery in automotive markets, the continued strong performance in Nortek Air Management, and "more challenging" market conditions in Aerospace.
"Trading in the period has been encouraging in a number of our end markets, and we are seeing the benefits of actions taken by management in our businesses' performance," said Chair Justin Dowley.
In the FTSE 250, Future shares fell 12% after making a GBP594 million takeover offer for price comparison site GoCo.
Under the agreed combination, GoCo shareholders will be entitled to receive 0.052497 new shares in magazine publisher Future and 33 pence in cash, valuing each GoCo share at 136p each. This represents a premium of 24% to Tuesday's closing price, when GoCo shares closed at 110p.
GoCo shareholders will own around 19% of the combined group. GoCo shares rose 12% to 123.00p at midday.
Separately on Wednesday, Future published its full-year results. Revenue surged 53% to GBP339.6 million in the financial year to September 30, and pretax profit rallied four-fold to GBP52.0 million from GBP12.7 million.
Future said the revenue growth was driven by a combination of organic growth and acquisitions, underpinned by a 56% rise in total online users.
Virgin Money UK slipped 4.7% after the lender reported a narrowed annual loss though saw a jump in credit impairment charges.
For the financial year that ended September 30, Virgin Money's pretax loss narrowed to GBP168 million from GBP232 million the year before. The lender's total impairment losses on credit exposures jumped to GBP501 million from GBP153 million the year before. But this was offset by Virgin Money's legacy conduct costs dropping to GBP26 million from GBP433 million the year before.
The sharp drop was due to the non-recurrence of significant one-off acquisition costs and legacy PPI conduct charges. Net interest income dropped 15% to GBP1.28 billion from GBP1.51 billion.
Genus rose 4.5% as the animal biotechnology company reported good trading momentum in the four months to the end of October.
It said trading was ahead of its expectations in the four-month period, with adjusted pretax profit showing strong growth compared to the same period in 2019. The Basingstoke, Hampshire-based company said revenue, volumes and adjusted operating profit for its porcine and bovine businesses all grew during the recent four months, while porcine royalty revenue increased in Latin America, Europe and Asia.
By Lucy Heming;Â lucyheming@alliancenews.com
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