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(Sharecast News) - London's stock markets ended marginally higher on Tuesday, with the top-flight index overcoming earlier losses to extend its record winning streak to a 16th consecutive session.
The FTSE 100 index eked out a modest gain to close up 0.01% at 8,597.42 points, while the FTSE 250 rose 0.55% to finish at 20,352.49.
In currency markets, sterling was last up 0.48% on the dollar to trade at $1.3360, as it gained 0.29% against the euro, changing hands at €1.1784.
"Whereas most Asian stock indices, including China's, rose on Tuesday despite the country's services growth slowing to a seven-month low, US markets remained on track for their second straight day of falling share prices," said IG senior technical analyst Axel Rudolph.
"The lingering threat of new tariffs being imposed by president Trump led to a rise in the gold price on safe haven flows and an outflow of US stocks into Asian and European indices."
Rudolph noted that bargain hunters bought into the German DAX 40 index, which dropped close to 2% in early trading as the leader of the centre-right coalition failed to secure the necessary majority in the Bundestag to become chancellor.
"By the end of the day, the German stock index clawed back practically all of its intraday losses and traded within 1% of its record high as political wrangling resulted in Friedrich Merz being voted in as the country's new chancellor."
UK services sector contracts on back of US tariff rollercoaster ride
In economic news, the UK services sector contracted for the first time in 17 months, according to revised figures from S&P Global's purchasing managers' index (PmI).
The index was adjusted slightly higher to 49.0 from an initial reading of 48.9 but remained below the 50.0 threshold that separates growth from contraction.
It marked the steepest fall in activity since January 2023, as new trade tariffs introduced by the United States and mounting business uncertainty dampened demand.
Rising input costs, driven by higher payroll expenses linked to the National Living Wage and increased National Insurance contributions, further weighed on sentiment.
Matt Swannell, chief economic advisor to the EY Item Club, said that the drop in the PMI was likely a reflection of weaker sentiment in response to US tariff announcements, rather than a genuine decline in services output, but still warned of slowing growth in the second quarter.
"The survey typically does a better job at capturing fluctuations in business confidence than actual changes in private sector activity, and we expect April's survey will prove a case in point," he said.
"It's difficult to reconcile last month's US tariff announcements and the well-trailed increase in employers' NICs with a sudden and outright contraction in services activity.
"Nonetheless, GDP growth is likely to be slower in the second quarter as the initial effects of tariffs start to be felt."
On the continent, growth in eurozone private sector activity lost momentum, as services output weakened despite a strong rebound in manufacturing.
The HCOB composite PMI dipped to 50.4 in April from 50.9 in March, reflecting softer demand and a drop in new orders.
At the same time, services PMI edged down to 50.1, a five-month low, signalling near-stagnation after several months of modest expansion.
HCOB noted that the region's overall growth was largely sustained by a pickup in factory output, which rose at its fastest pace in more than two years.
"Eurozone economic growth slowed at the start of the second quarter, following a pick-up in the first three months of the year," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
"The services sector, which is a major player, practically stagnated in April.
"Even though manufacturing output saw a surprising uptick, it wasn't enough to prevent the overall slowdown in growth.
Elsewhere, China's services sector also showed signs of strain, with the Caixin PMI falling to 50.7 in April from 51.9 the previous month, the lowest level since September.
While the index remained in expansionary territory for a 28th consecutive month, it came in well below expectations.
Caixin reported that new business growth slowed sharply amid escalating trade tensions with the US, pushing business confidence to its lowest since early 2020.
Despite rising cost pressures, service providers cut prices in an effort to boost demand.
"In April, supply and demand grew at a slower pace than the previous month," said Wang Zhe, senior economist at Caixin Insight Group.
"Market improvements were limited amid the China-US trade row.
"Service providers cut prices charged to customers to boost sales amid tepid demand and fierce market competition, resulting in a third straight monthly drop in prices charged."
Mining stocks buoyed by gold prices, M&S and AB Foods in the red
On London's equity markets, mining stocks were buoyed by a strong rally in gold prices as the dollar weakened ahead of the US Federal Reserve's policy decision.
Fresnillo rose 4.63%, Hochschild Mining advanced 7.66%, and Endeavour Mining added 5.23% as gold futures climbed 2.43% to $3,402.90 an ounce on Comex.
Elsewhere, Deliveroo shares gained 2.03% after the food delivery company agreed to a £2.9bn takeover offer from US rival DoorDash.
The deal marked a significant consolidation in the sector, and followed a strong run for Deliveroo's stock, which was now up over 55% in the past month.
Retailers were also stronger, with J Sainsbury up 2.86%, Tesco up 1.81%, and Kingfisher rising 1.81%, reflecting broader resilience in the sector despite ongoing economic uncertainty.
On the downside, Marks and Spencer fell 0.71% as the retailer continued to deal with disruptions to online orders following a cyberattack last month.
Associated British Foods lost 1.06% after confirming talks to sell its Allied Bakeries unit to Hovis owner Endless.
Smurfit Westrock dropped 3.9%, extending recent losses after announcing a series of plant closures and capacity cuts.
The stock was down more than 7% since the company revealed plans to shut production facilities in the US and Germany.
Anglo American also declined, down 1.5%, as investor concerns grew over a potential delay in the sale of its Australian coal assets following operational disruptions at its Moranbah North mine.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 8,597.42 0.01%
FTSE 250 (MCX) 20,352.49 0.55%
techMARK (TASX) 4,671.99 0.19%
FTSE 100 - Risers
Fresnillo (FRES) 1,063.00p 4.73%
Sainsbury (J) (SBRY) 272.40p 3.42%
Babcock International Group (BAB) 865.50p 2.79%
Entain (ENT) 682.00p 2.38%
British American Tobacco (BATS) 3,296.00p 2.20%
Admiral Group (ADM) 3,328.00p 2.15%
Beazley (BEZ) 904.50p 2.14%
Compass Group (CPG) 2,602.00p 1.96%
United Utilities Group (UU.) 1,136.50p 1.93%
Kingfisher (KGF) 293.10p 1.81%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 360.20p -4.66%
Smurfit Westrock (DI) (SWR) 2,947.00p -3.90%
Standard Chartered (STAN) 1,056.00p -3.69%
CRH (CDI) (CRH) 7,118.00p -3.55%
Anglo American (AAL) 2,070.00p -3.09%
Mondi (MNDI) 1,111.50p -2.84%
Shell (SHEL) 2,434.00p -2.11%
WPP (WPP) 578.40p -2.00%
The Sage Group (SGE) 1,253.50p -1.72%
Pearson (PSON) 1,163.00p -1.65%
FTSE 250 - Risers
Alpha Group International (ALPH) 3,050.00p 8.54%
Hochschild Mining (HOC) 296.00p 8.32%
Endeavour Mining (EDV) 2,214.00p 5.23%
Ashmore Group (ASHM) 151.00p 4.86%
Lion Finance Group (BGEO) 6,325.00p 4.29%
Genus (GNS) 2,090.00p 4.24%
Plus500 Ltd (DI) (PLUS) 3,252.00p 4.23%
QinetiQ Group (QQ.) 416.80p 3.99%
Dr. Martens (DOCS) 56.05p 3.80%
Moonpig Group (MOON) 243.50p 3.62%
FTSE 250 - Fallers
Ferrexpo (FXPO) 64.70p -16.73%
Trainline (TRN) 280.00p -5.28%
Ocado Group (OCDO) 263.50p -3.90%
Wizz Air Holdings (WIZZ) 1,672.00p -3.18%
Investec (INVP) 470.60p -2.69%
Close Brothers Group (CBG) 319.20p -2.31%
Oxford Instruments (OXIG) 1,700.00p -2.19%
Future (FUTR) 715.00p -2.05%
Ninety One (N91) 150.80p -2.01%
RS Group (RS1) 516.50p -1.90%
