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LONDON (Alliance News) - The UK's main stock indices are lower again Tuesday, weighed down by continued concern that that the tightening of US monetary conditions will lead to a slowdown of global growth, as well as a number of disappointing UK corporate releases.
Meanwhile, the pound has jumped higher after a surprisingly strong reading of the UK construction industry.
By mid-morning Tuesday, the FTSE 100 is down 0.4% at 6,441.60, the FTSE 250 is down 0.4% at 15,500.35, and the AIM All-Share is down 0.3% at 853.72.
Major European stock markets also are lower, with the DAX down 0.7% and the CAC is down 0.1.
The selling being seen in Europe follows the significant falls seen in Asia and the US overnight, with many commentators suggesting that the Nikkei is now in "correction mode", closing down 4.2% Tuesday. The Hang Seng lost almost 3%, and all US markets lost more than 2%.
"The run on global equities continues for another day as US and Asian futures have again led Europe lower this morning", said CMC Markets senior sales trader Toby Morris. "The market endured a backlash from yesterday afternoon?s big ISM manufacturing miss which set the tone for the overnight move, sending Asian shares to a 5-month low," Morris says.
In UK economic news, the construction PMI for January recorded 64.6, up from 62.1 in December and much better than the slowdown to 61.5 that had been expected. Economists had expected the lower reading due to poor January weather, but instead the Chartered Institute of Purchasing & Supply said that business conditions were the best since August 2007.
The strong data sent the pound to a high for the day at USD1.6342 and EUR1.2094. The euro is marginally lower against the dollar at EUR1.3510. The forex majors continue to trade in relatively tight ranges ahead of the major risk events on Thursday - the European and UK central bank meetings.
A few pieces of second-tier European data also have been released Tuesday. Spanish unemployment increased unexpectedly, by 113,100 in January. Economists had been expecting a 21,300 drop in unemployment. The reading is particularly disappointing given the 107,600 drop seen in December.
Producer prices in the eurozone decreased by slightly less than expected, with the EU PPI recording negative 0.8% year-on-year in December, slightly better than the negative 0.9% that had been expected. In Italy, the consumer price index recorder 0.7% growth year-on-year in January, in line with expectations.
Arm Holdings leads the blue chip fallers, down 2.5% after reporting that a global slowdown in smart phone sales led to unexpectedly low royalties from its processors in the fourth quarter.
BG Group is the biggest FTSE 100 gainer, up 2.8% after reporting its fourth-quarter earnings. Although the group swung into a loss, two profit warnings published before the results had soften up market expectations.
In the FTSE 250, Ocado is the lead faller, down 4.5% after announcing it is still making a loss despite last year's deal to take Morrison's online. Ocado also announced the departure of Jason Gissing, the co-founder, who will be retiring at the next annual general meeting in May.
Premier Oil leads the gainers on the FTSE 250, up 8.5% following the news that CEO Simon Locket will stem down after a successor is appointed. The news seems to have been taken very positively despite production having increased by 56% since 2004 under Locket's leadership.
Lots from the US still to come Tuesday: Fed speaker Jeffery Lacker is speaking at 1330 GMT, the US Redbook of retail sales at 1355 GMT, the US ISM New York index at 1445 GMT and Factory Orders and an Economic Optimism Index at 1500 GMT.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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