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(Alliance News) - The FTSE 100 crept into the new week after the bank holiday, with traders digesting a bounce-back for stocks in New York overnight and sharp losses in Europe on Monday.
"With the Fed's rate hike edging closer a definite sense of nervousness pervades," commented Chris Beauchamp, chief market analyst at online trading platform IG.
The FTSE 100 index closed up 16.78 points, or 0.2%, at 7,561.33 on Tuesday. The FTSE 250 ended down 187.95 points, or 0.9%, at 20,520.76, and the AIM All-Share closed down 8.74 points, or 0.9%, at 1,013.52.
The Cboe UK 100 ended up 0.2% at 751.59, the Cboe UK 250 closed down 0.7% at 18,145.74, and the Cboe Small Companies ended down 0.1% at 15,127.37.
Stocks in London finished Tuesday's session mixed with traders squarely focused on Wednesday's US interest rate decision.
Markets have a 50 basis point hike 99% priced in.
The Federal Reserve is scrambling to tighten policy amid soaring US inflation. Data from the US Bureau of Labor Statistics showed consumer prices soared 8.5% in March on an annual basis, stepping up from the 7.9% increase seen in February.
Expectations of a chunky 50 basis point hike firmed up after Fed Chair Jerome Powell last month said such a move was "on the table" for May.
"It is appropriate, in my view, to be moving a little more quickly. And I also think there's something in the idea of front-end loading whatever accommodation one thinks is appropriate," Powell said during a debate on the global economy hosted by the International Monetary Fund on the sidelines of its spring meetings.
The dollar was firm heading into Wednesday's decision. The pound was quoted at USD1.2511 at the London equities close Tuesday, down compared to USD1.2568 at the close on Friday.
The euro stood at USD1.0535 at the European equities close Tuesday, down against USD1.0547 at the same time on Friday. Against the yen, the dollar was trading at JPY129.97, up compared to JPY129.68 late Friday.
Gold was quoted at USD1,873.30 an ounce at the London equities close Tuesday, down against USD1,906.75 at the close on Friday.
Stocks in New York were higher at the London equities close, with the DJIA up 0.6%, the S&P 500 index up 0.9%, and the Nasdaq Composite up 0.5%.
"US markets underwent a sharp turnaround yesterday after hitting their lowest levels this year, and while we saw a decent rebound, the fact that we made fresh lows suggests that investors remain highly uncertain about what to expect from the Federal Reserve tomorrow," said Michael Hewson, chief market analyst at CMC Markets.
In European equities on Tuesday, the CAC 40 in Paris ended up 0.6%, while the DAX 40 in Frankfurt ended up 0.7%.
Keeping the large-cap index in the green was oil major BP, which closed up 5.8% after reporting a surge in underlying profit and launching a USD2.5 billion share buyback.
For the three months that ended March 31, BP swung to an attributable loss of USD20.38 billion from a USD4.67 billion profit in the first quarter last year. BP said the reported result included pretax adjusted items of USD30.8 billion.
The London-based firm attributed the loss to its decision to exit its 19.75% shareholding in state-owned Russian oil firm Rosneft. BP said that, in the first quarter, the total post-tax charge for this was USD25.5 billion.
However, on an underlying replacement cost basis, BP reported a profit of USD6.25 billion, up 54% from USD4.07 billion in the fourth quarter of last year and more than doubled from USD2.63 billion a year ago.
Brent oil was quoted at USD106.12 a barrel at the London equities close Tuesday, down from USD110.30 late Friday. However, the price of the North Sea benchmark remains 36% higher in the year-to-date.
Turning to shareholder returns, BP raised its first-quarter dividend by 4.0% to 5.46 cents from 5.25 cents the year before. It also announced a further share buyback. BP said it plans to execute a USD2.5 billion share buyback before announcing its second-quarter results.
Peer Shell, which reports its own first quarter results on Thursday, advanced 2.0%.
This was helping to offset Segro's drag at the bottom of the FTSE 100 index, the stock shedding 10% after Kepler Cheuvreux downgraded the warehouse property investor to 'hold' from 'reduce'.
Avast tumbled 5.7% after posting lower revenue for the quarter that ended March 31, due to the sale of its Family Safety business a year ago and ahead of its proposed takeover by US peer NortonLifeLock.
Adjusted earnings before interest, tax, depreciation and amortisation fell by 4.3% to USD127.9 million from USD133.7 million. The adjusted Ebitda margin was 54.5%, Avast said.
Avast guided that its adjusted Ebitda margin for the full year will narrow to slightly below 50%. "This reflects 10 months with zero sales in Russia," the firm explained.
In the FTSE 250, Auction Technology rose 8.0% after JPMorgan raised the online auction operator to 'overweight' from 'neutral'.
Energean was the second-best mid-cap performer, closing up 7.6%. Subsidiary Energean Israel signed a gas sales agreement with the East Hagit Power Plant Ltd Partnership.
Under the agreement, Energean will supply gas to East Hagit for a term of 15 years, with a total contract quantity of up to 12 billion cubic feet. Energean said the agreement has the potential to generate revenue of up to USD2 billion over the offtake period.
Wednesday's UK corporate calendar has full-year results from online clothing retail boohoo and trading statements from pub chain operator JD Wetherspoon and lender OSB Group. First quarter results are due from luxury car maker Aston Martin and Paddy Power owner Flutter Entertainment.
Headlining Wednesday's economic calendar is the US Federal Reserve's interest rate decision at 1900 BST. Also in focus will be a raft of PMIs, due from Germany at 0855 BST, the eurozone at 0900 BST and the US at 1445 BST. The German trade balance is out at 0700 BST.
Financial markets in Japan and mainland China will remain shut on Wednesday.
By Lucy Heming; lucyheming@alliancenews.com
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