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(Alliance News) - Stock prices in London were in the red at midday on Tuesday, though sterling stayed strong against the dollar after UK unemployment data and ahead of the autumn budget on Thursday.
"The latest UK jobs figures demonstrated some resilience with unemployment remaining low, though notably there are more working age people quitting the world of work entirely and the number of working days lost to strikes hit a decade high. This has implications for the country's productivity as the Treasury looks to plug a big gap in the public finances," said Russ Mould at AJ Bell.
The FTSE 100 index was marginally lower, down just 2.04 points at 7,383.13. Smaller-cap measures were performing worse. The FTSE 250 was down 127.33 points, or 0.7%, at 19,494.49, and the AIM All-Share was down 3.53 points, 0.4%, at 848.02.
The Cboe UK 100 was down 0.1% at 738.01. The Cboe UK 250 was down 0.7% at 16,801.18, while the Cboe Small Companies was down 0.2% at 12,982.26.
The rate of unemployment in the UK stood at 3.6% in the three months to September, up from 3.5% in the three months to August, the Office for National Statistics said.
It came as more people dropped out of the workforce, with a hike in the proportion of people neither looking for work nor working.
Wage rises continued to be far outstripped by rocketing inflation, however, with average earnings with bonuses stripped out down 3.8% when compared with the consumer price index.
The pound was quoted at USD1.1861 on Tuesday afternoon in London, up from USD1.1714 late Monday.
Stocks on the continent were mixed. The CAC 40 index in Paris was up 0.3%, but the DAX 40 in Frankfurt was 0.1% lower in the early afternoon.
EU and eurozone gross domestic product increased by 0.2% in the three months to September, compared to the previous quarter, statistics published by Eurostat showed.
This quarter's figures for seasonally adjusted GDP, which was identical for the euro area and the wider EU, was in line with analysts' consensus quoted by FXStreet.
Compared with the same quarter a year ago, GDP increased by 2.1% in the euro area and by 2.4% in the EU.
The euro traded at USD1.0413 midday on Tuesday, up from USD1.0334 late Monday.
Stocks in New York were called higher on Tuesday. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 up 0.7%, and the Nasdaq Composite up 1.1%.
At 1330 GMT, the US will publish the October producer price index.
"Particular attention will be on today's PPI numbers in the wake of last week's positive reaction to the lower-than-expected CPI," said Michael Hewson at CMC Markets.
"In recent months PPI has tended to act as a leading indicator, although there was a spike in June, the general trend has been a gradual decline in prices since the end of Q1," he said.
However, Marc Chandler at Bannockburn said that the data was unlikely to change the market's expectation for a 50 basis point hike by the US Federal Reserve next month.
In London, BAE Systems was up 3.0% after the defence, aerospace and security products maker confirmed its 2022 guidance, amid strong order intake.
Sales for the full year are expected to grow by between 2% and 4% from GBP21.31 billion in 2021, thanks to a strong order intake and revenue benefiting from a stronger US dollar.
Chief Executive Charles Woodburn said: "Our operational performance year to date underlines our confidence in the full year group guidance for top line growth and margin expansion as well as our cash flow targets. Order flow remains strong and our focus on programme execution, cash generation and efficiencies is helping us to navigate the challenging operating environment."
Melrose Industries was up 0.8%, after it said that it traded in line with expectations for the full year during the four-month period to October 31.
Melrose is a London-based turnaround firm that specialises in buying and improving manufacturing firms. It said group revenue during the recent period was up 14% on the same period last year and operating profit was "substantially higher".
Vodafone was down 7.0%. Chief Executive Nick Read said the telecommunications firm is taking a number of steps to mitigate the "economic backdrop of higher energy costs and rising inflation".
Vodafone lowered its full-year outlook for adjusted earnings before interest, tax, depreciation, and amortization and special losses to between EUR15.0 billion and EUR15.2 billion. Previously, it had guided between EUR15.0 billion and EUR15.5 billion.
In the FTSE 250, Ninety One was down 6.3%. The money manager reported its interim profit shrank as it struggled with lower levels of new business and portfolio de-risking by clients amid economic turmoil.
For six months that ended September 30, pretax profit was GBP110.6 million, down 16% from GBP132.1 million a year prior. Revenue dropped by 2.9% to GBP384.3 million from GBP395.9 million.
"Rising inflation and interest rates, increased geopolitical uncertainty and sharply lower financial asset prices contributed to challenging operating conditions. The high levels of client engagement could not counter the impact of this environment on our results," said Hendrik du Toit, founder & chief executive of Ninety One.
Aston Martin was the worst performer in the FTSE 250 at midday, down 9.9%, after Jefferies cut the luxury car maker to 'underperform' from 'hold'.
Elsewhere, Speedy Hire shares plunged 8.4% as the Merseyside-based tools hire services firm reported that its profit had fallen in the first half of the year due to inflationary pressures on its cost base.
Nonetheless, Speedy Hire said it remained confident for its full year results.
"Revenue growth is continuing with new contract wins, the effect of actions taken on price and a healthy pipeline of customer activity which gives confidence for further growth in the second half," said Chief Executive Dan Evans, though he cautioned that the macroeconomic outlook remained uncertain and inflationary pressures were high.
Made Tech jumped 7.1% after winning a GBP10 million contract with the UK Home Office.
The public sector-focused technology services provider said the contract represented a renewal and expansion of an initial contract won with the Home Office in May 2021.
Gold was priced at USD1,775.09 an ounce midday Tuesday, up sharply from USD1,758.52 late Monday.
Brent oil fetched USD92.63 a barrel, down from USD94.44, as traders continued to weigh up the global economic outlook, OPEC+ production risks and China's Covid approach.
Against the yen, the dollar was quoted at JPY139.29, down from JPY140.45 on Monday.
By Heather Rydings; heatherrydings@alliancenews.com
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