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(Alliance News) - Caution continued to dominate stock market activity in Europe on Wednesday as traders eye upcoming interest rate decisions from Canada and the eurozone, as well as a key US inflation reading for May.
A dip in shares of mining stocks in London was offsetting a move higher for airlines, leaving the London's FTSE 100 lagging European peers.
The blue-chip index was down 38.92 points, or 0.6%, at 7,056.17 midday Wednesday. The mid-cap FTSE 250 was down 136.44 points, or 0.6%, at 22,759.06. The AIM All-Share index was down 0.5% at 1,251.08.
The Cboe UK 100 index was down 0.7% at 703.00. The Cboe 250 was down 0.7% at 20,507.69 and the Cboe Small Companies down 0.2% at 15,175.62.
In mainland Europe, the CAC 40 in Paris was flat while the DAX 30 in Frankfurt dipped 0.5% on Wednesday.
"Few investors are willing to take on big positions ahead of tomorrow's double risk whammy - the ECB rate decision and US CPI inflation data," said Sophie Griffiths, market analyst at Oanda.
Ahead of the ECB's rate decision on Thursday is one from the Bank of Canada on Wednesday at 1500 BST.
While stocks in mainland Europe drifted, the FTSE 100 was lagging the pack, which Oanda's Griffiths chalked up to the underperformance of miners in the wake of rising Chinese producer prices.
The producer price index, which measures the cost of goods at the factory gate, exceeded expectations to spike 9.0% on-year in May, said the National Bureau of Statistics. This marks its highest jump since September 2008.
In particular, prices in the oil and natural gas extraction industry in China rose 99% from a year ago, said NBS senior statistician Dong Lijuan.
"The concern here is that rising factory costs could trickle into the rest of the world...Miners are trading under pressure, tracing base metal prices lower. Any tightening of policy in China could dampen demand for these commodities," said Griffiths.
Miners BHP Group, Antofagasta and Anglo American were down 2.2%, 2.2% and 2.1% respectively at midday.
Growing factory price pressures in China provide a prelude to the keenly anticipated US consumer inflation print for May, due on Thursday.
The US inflation measure is expected to show annual growth of 4.7% for May, according to FXStreet, which would mark another uptick after April's 4.2% increase.
Wall Street is set for a subdued start to trade on Wednesday. The Dow Jones Industrial Average was called down 0.1%, the S&P 500 flat, and the Nasdaq Composite down 0.1%.
The dollar, meanwhile, edged lower. Against the yen, the dollar was marginally soft at JPY109.46 versus JPY109.47.
Sterling was quoted at USD1.4174 midday Wednesday, higher than USD1.4147 at the London equities close on Tuesday.
The euro traded at USD1.2192, up on USD1.2181 late Tuesday as Germany's trade surplus grew in April. Exports were up 0.3% month-on-month at EUR111.8 billion and imports fell 1.7% to EUR96.3 million, resulting in an April trade surplus of EUR15.9 billion, up from EUR14.0 billion in March.
Gold was quoted at USD1,890.35 an ounce on Wednesday at midday in London, down slightly from USD1,892.50 late on Tuesday. Brent oil was trading at USD72.48 a barrel, up from USD71.52.
On the London Stock Exchange, International Consolidated Airlines was the top performer in the FTSE 100 despite news that the UK competition watchdog is investigating its British Airways arm, as well as budget carrier Ryanair, over refunds.
IAG shares were up 3.6% and Ryanair rose 2.5%.
The UK Competition & Markets Authority has opened enforcement cases into both firms over concerns that, during periods of lockdown across the UK, BA and Ryanair refused to give refunds to consumers that were lawfully unable to fly. The firms instead offered vouchers or the option to rebook.
There was a general move higher in travel stocks on Wednesday, with mid-cap airlines easyJet and Wizz Air rising 2.8% and 2.1% respectively.
"Investors were more optimistic about the travel and leisure sector on increased hopes that many travel restrictions will be lifted soon. The US Centers for Disease Control & Prevention has relaxed travel advice for more than 110 countries and territories, thereby increasing the earnings prospects for companies that provide transport or accommodation," said Russ Mould, investment director at AJ Bell.
Elsewhere in the travel sector space, SSP Group shares were trading 0.7% higher at midday as it unveiled a drop in interim revenue and a widened loss.
SSP operates branded food, beverage and retail concessions in around 180 airports and 300 railway stations across 35 countries.
Revenue fell 79% to GBP256.7 million for the half-year that ended March 31, with sales severely hit by reductions in passengers passing through airports and train stations due to the pandemic. SSP's pretax loss widened to GBP299.7 million from GBP34.3 million a year ago.
Smith & Nephew rose 2.3% after Credit Suisse raised the medical devices maker to Outperform from Neutral.
Elsewhere in London, Clinigen shares lost 25% as it cut its earnings outlook.
"The negative impact of Covid-19 is primarily due to the global reduction in hospital-based oncology treatments and delays to clinical trials. In particular, demand for Proleukin within its current approved indications was significantly weaker than expected in recent months," the pharmaceuticals and services provider explained.
Proleukin is a treatment for metastatic melanoma and metastatic renal cell carcinoma.
Clinigen said net revenue is expected to be in line with prior guidance and consensus expectations. However, adjusted earnings before interest, tax, depreciation and amortization is guided between GBP114 million and GBP117 million - due to the lower proportion of revenues from the Products division. Adjusted Ebitda in financial 2020 was GBP131.0 million.
By Lucy Heming; lucyheming@alliancenews.com
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