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(Alliance News) - September started where August left off, with markets still plagued by worries over central bank tightening, inflation and recession risks.
The FTSE 100 index was down 81.43 points, or 1.1%, at 7,202.72 early Thursday. The mid-cap FTSE 250 index was down 198.15 points, or 1.0%, at 18,865.60. The AIM All-Share index was down 5.72 points, or 0.7%, at 877.01.
The Cboe UK 100 index was down 1.2% at 719.75. The Cboe 250 was down 1.2% at 16,195.00, and the Cboe Small Companies flat at 13,927.34.
In mainland Europe, the CAC 40 in Paris was down 1.2% while the DAX 40 in Frankfurt was down 0.9% early Thursday.
"August was a month of two halves for markets. But the optimism at the start about 'peak inflation' gave way to a more gloomy tone as central bankers pivoted in a hawkish direction and Europe's energy woes continued to mount," said Deutsche Bank.
Concerns over monetary policy tightening and the possibility of higher-for-longer interest rates have heightened in recent days, after a hotter-than-expected eurozone inflation print and remarks from central bankers.
Data on Wednesday showed eurozone inflation hit a fresh record of 9.1%, raising the stakes for next week's European Central Bank meeting.
Meanwhile, another Fed official has signalled the bank is determined to keep lifting borrowing costs, mirroring comments by head Jerome Powell last week that there would be no let-up in the fight against inflation.
"My current view is that it will be necessary to move the Fed funds rate up to somewhat above four percent by early next year and hold it there," said Cleveland Fed President Loretta Mester in remarks prepared ahead of an event for the Dayton Area Chamber of Commerce in Ohio.
"I do not anticipate the Fed cutting the Fed funds rate target next year."
Attention now turns to a raft of PMIs on Thursday to gauge the health of economies in Europe and the US.
Purchasing managers' index readings are due from Germany at 0855 BST, the eurozone at 0900 BST, and the UK at 0930 BST. There is a US S&P Global manufacturing PMI at 1445 BST, followed by the ISM index at 1500 BST.
Ahead of this, the pound slipped to USD1.1617 early Thursday from USD1.1638 at the London equities close on Wednesday. The euro traded at USD1.0026, down from USD1.0064 late Wednesday.
Against the yen, the dollar was quoted at JPY139.19, up from JPY138.75.
In Asia on Thursday, the Japanese Nikkei 225 index ended down 1.5%. In China, the Shanghai Composite closed down 0.5%, while the Hang Seng index in Hong Kong was down 1.9%. The S&P/ASX 200 closed down 2.0%.
Brent oil was trading at USD94.83 a barrel, down from USD97.05 late Wednesday. The commodity has shed nearly 6% since the start of the week, but remains 22% higher since 2022 began.
Gold was quoted at USD1,706.19 an ounce early Thursday, lower than USD1,720.40 on Wednesday.
At the top of the FTSE 100 was Pearson, up 0.9% after JPMorgan resumed the educational publisher with an 'overweight' rating.
Towards the bottom of the index was Reckitt Benckiser, down 4.7% after saying Chief Executive Laxman Narasimhan, who was appointed in September 2019, is stepping down to relocate back to the US. He will step down from the role at the end of this month.
"Laxman has decided for personal and family reasons to relocate back to the US and has been approached for an opportunity that enables him to live there," Reckitt explained.
He will be replaced by Senior Independent Director Nicandro Durante while the company "evaluates and selects" the future leadership. Durante has previous experience heading up a FTSE 100 listing, having been the boss of British American Tobacco for eight years before leaving in 2019.
Miners were lower after data showed China's manufacturing sector unexpectedly slipped into contraction in August.
Caixin's manufacturing PMI slipped past the no-change mark of 50.0, as the reading fell to 49.5 points in August from 50.4 in July, indicating a marginal decline. Consensus, as cited by FXStreet, had been expecting a reading of 50.2.
Glencore was down 5.4%, the worst performing blue-chip in opening trade, while Antofagasta fell 3.0% and Anglo American slipped 2.9%.
Rio Tinto was down 2.1%. It has reached a new agreement to take full ownership of Turquoise Hill, owner of the Oyu Tolgoi copper-gold project in Mongolia, at an improved price of CAD43, around USD32.64, per share.
In August, Turquoise Hill had said it was no longer considering Rio Tinto's takeover offer of CAD34 per share, flagging that conditions in both equity and copper markets had "changed significantly" since the March offer.
Rio Tinto returned last week with an improved offer of CAD40 per share, which Turquoise Hill acknowledged. On Thursday, the two said they have reached agreement in principle on a CAD43-per-share deal, valuing the Turquoise Hill minority share capital at USD3.3 billion.
This further increased offer represents a premium of 67% to Turquoise Hill's closing price of CAD25.68 on March 11. The stock closed at CAD36.12 in Toronto on Wednesday, giving the entire company a CAD7.27 billion, about USD5.52 billion, market capitalisation.
In the FTSE 250, Kainos rose 2.6%. The software firm backed market forecasts for its current financial year with trading since the start of April strong across both its business areas. It placed consensus at GBP62.7 million to GBP66.5 million in adjusted pretax profit on GBP335.7 million to GBP373.4 million in revenue.
Alongside the PMI data, there are eurozone unemployment figures at 1000 BST, followed by initial jobless claims in the US at 1330 BST.
By Lucy Heming; lucyheming@alliancenews.com
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