(Alliance News) -Â The mood was subdued on Wednesday after US President Donald Trump called off stimulus talks with Democrats.
However, losses in Europe were limited at midday and Wall Street was headed for a rebound at the open.
London's blue-chip FTSE 100 index was down just 0.28 of a point at 5,949.66 midday Wednesday. The mid-cap FTSE 250 index was up 20.32 points, or 0.2%, at 17,817.76. The AIM All-Share index was up 0.1% at 973.81.
The Cboe UK 100 index was flat at 591.69. The Cboe 250 was up 0.2% at 15,142.68, and the Cboe Small Companies down 0.1% at 9,414.03.
In mainland Europe, the CAC 40 in Paris was down 0.2% while the DAX 30 in Frankfurt was 0.3% lower Wednesday afternoon.
"Sentiment is a little downbeat this morning in the wake of yesterday's news that President Trump stopped the coronavirus relief package negotiations," said David Madden at CMC Markets.
Trump on Tuesday called off talks on a new stimulus plan to boost the Covid-ravaged US economy until after November's presidential election, sending Wall Street plunging and upending recent progress made in the long-delayed negotiations.
His afternoon tweet undid optimism that had developed in recent days after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin resumed talks on a follow-up measure to the USD2.2 trillion CARES Act passed to blunt the coronavirus downturn.
Just hours before Trump's tweet announcing the end of talks, Federal Reserve Chair Jerome Powell had repeated his call for additional spending to help the world's largest economy weather a downturn that has left tens of millions unemployed and caused a historic contraction in the second quarter.
But Trump struck a more conciliatory tone that night, tweeting he would immediately sign a Congressional bill guaranteeing a second round of USD1,200 stimulus checks and USD135 billion for small businesses – two elements that were already included in the negotiations.
CMC's Madden said: "At least there is some sort of clarity in the situation now. Equity traders have digested the news, and the FTSE 100 is in the red but it is off the lows of the day, while the DAX 30 and the CAC 40 has set session lows, but the losses are relatively small."
Stocks in the US are on course for a rebound after Tuesday's losses. The Dow Jones is pointed up 0.6% on Wednesday and the S&P 500 and Nasdaq both up 0.5%.
On Tuesday, in the wake of the stimulus disappointment, the Dow Jones Industrial Average ended down 1.3%, the S&P 500 down 1.4% and Nasdaq Composite closed 1.6% lower.
In London, Taylor Wimpey rose 2.6% after Credit Suisse bumped up the housebuilder to Outperform from Neutral. Credit Suisse said it thinks Taylor Wimpey is "oversold".
A further boon for housebuilders on Wednesday were figures from Halifax showing UK house prices continued to rack up strong growth in September with the average price now approaching GBP250,000.
On a monthly basis, house prices were up 1.6% in September, following growth of 1.7% in both August and July.
Annually, they rocketed 7.3% - the strongest growth in over four years and following a rise of 5.2% in August. However, Russell Galley, managing director at Halifax, noted that September 2019 saw political uncertainty "weigh on the market".
Also higher was Tesco, rising 2.1% after the grocer posted interim profit growth and boosted its payout by 21%.
Supermarket chain Tesco, which is headquartered in Welwyn Garden City, recorded a GBP551 million pretax profit for the 26 weeks ended August 29, up 29% from GBP428 million the year before.
This as revenue increased to GBP28.72 billion from GBP28.51 billion after a particularly strong performance in its UK & Republic of Ireland region, where revenue rose 1.7% to GBP26.34 billion from GBP25.90 billion. Group sales were up 6.5% at actual exchange rates, with a 69% increase in online sales - the rate of growth hitting 90% in the second quarter.
In terms of outlook, Tesco is expecting to report a "broadly even balance to the year in terms of 1H/2H retail profitability" with retail operating profit in its current financial year to be at least the same level as financial 2020 on a continuing operations basis.
The grocer increased its interim dividend per share by 21% to 3.20p from 2.65p.
Compass fell 2.1% after Bank of America cut the contract caterer to Neutral from Buy.
Rising on a ratings upgrade in the FTSE 250 was FirstGroup, shares advancing 6.3% after being boosted to Buy from Neutral by Citigroup. National Express, also raised to Buy from Neutral by Citigroup, rose 1.9%.
Sterling was quoted at USD1.2866 Wednesday midday, down from USD1.2956 at the London equities close on Tuesday.
Negotiations between the EU and Britain on their post-Brexit relationship resume in London on Wednesday in the hope of reaching an agreement by the end of October, European sources said.
The talks are due to last until Friday when a meeting is scheduled between chief negotiators Michel Barnier and David Frost.
European Commission President Ursula von der Leyen and UK Prime Minister Boris Johnson agreed Saturday to speed up talks in an attempt to reach a deal while negotiations are stalled and time is running out. The three thorny issues of fishing rights, public aid and the governance of the agreement remain.
The euro traded at USD1.1755 on Wednesday, lower than USD1.1787 late Tuesday.
German industrial production slipped in August, falling below market expectations.
On a seasonally and calendar adjusted basis production in industry was down by 0.2% in August compared to July, when it rose by 1.4%. Market consensus, according to FXStreet, was hoping for a 1.5% rise.
ING commented: "After two strong months in May and June, German industry is clearly struggling to gain further momentum. However, even if industrial production remains unchanged in September, the quarterly growth rate would still be around 10%. This is another illustration of both the strong rebound of the German economy after the lifting of the lockdown measures but also of the fact that no one should be blinded by strong third quarter data."
In the economic calendar on Wednesday, there are US FOMC meeting minutes at 1900 BST.
Against the yen, the dollar was quoted at JPY106.09 versus JPY105.60.
Gold was quoted at USD1,888.29 an ounce on Wednesday, falling from USD1,909.10 on Tuesday. Brent oil was trading at USD41.90 a barrel, lower than USD42.58 late Tuesday.
By Lucy Heming;Â lucyheming@alliancenews.com
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