(Alliance News) - Stocks in London started Wednesday's session in a dour mood following news of retaliation by Iran against the US following the killing of an Iranian general last week, coupled with an unexplained passenger plane crash in Iran.
The FTSE 100 index was down 30.08 points, or 0.4%, at 7,543.77 early Wednesday. The mid-cap FTSE 250 index was down 192.77, or 0.9%, at 21,639.91. The AIM All-Share index was 0.1% higher at 958.61.
The Cboe UK 100 index was down 0.4% at 12,782.71. The Cboe 250 was down 0.7% at 19,592.59, while the Cboe Small Companies up 0.6% at 12,437.55.
In mainland Europe, the CAC 40 in Paris was down 0.5% while the DAX 30 in Frankfurt was 0.7% lower.
Iran fired missiles on Wednesday at Iraqi bases housing the US military, officials in Washington and Tehran said, in the first act of the Islamic republic's promised revenge for the US killing of a top Iranian general last week.
The Pentagon said it was still "working on initial battle damage assessments" after "Iran launched more than a dozen ballistic missiles against US military and coalition forces in Iraq".
Iranian state television reported an attack on one base housing US personnel, saying it was in response to Friday's killing in a US drone strike of Soleimani, one of the most important figures in the country's government.
"To attack so openly, and in defiance of US Trump's recent warnings, and from within Iran itself, is a clear escalation that is also an act of war by any definition," said Rabobank.
"For an Iranian economy in free-fall, which despite home advantage has no hope of actual military victory in a face-to-face confrontation with the States, this seems a remarkable, dramatic, and, most worryingly, illogical move," Rabobank said. "At this stage, with news hazy and facts on the ground absent, there appear two realistic scenarios. One is that this attack is theatre to placate the large crowds who were so recently on Iran's streets. The alternative is that Iran has genuinely decided to test Trump by also upping the ante."
Meanwhile, a Ukrainian airliner carrying 176 passengers crashed shortly after takeoff from Tehran on Wednesday, killing all on board, officials in Iran said.
The Boeing 737 had departed Imam Khomeini International Airport before dawn bound for the Ukrainian capital Kiev, semi-official news agency ISNA said. It slammed into farmland at Khalaj Abad, in Shahriar county, about 45 kilometres northwest of the airport, according to reports on state media.
The crash was likely to have been caused by "technical difficulties", Press TV said, quoting Ali Khashani, spokesman for Imam Khomeini International Airport. A video aired by the state broadcaster appeared to show the plane already on fire, falling from the night sky.
Oil was higher in the wake of the heightened tensions in the Middle East. Brent was quoted at USD69.01 a barrel early Wednesday, versus USD68.02 at the London equities close on Tuesday.
Safe-haven gold was higher as well, quoted at USD1,588.06 early Wednesday, up from than USD1,568.77 at the London equities close on Tuesday and having spiked above USD1,600 overnight.
London-listed gold miners were higher, such as Polymetal International, up 2.1%, Fresnillo, up 1.2%, and Centamin, up 3.3%.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 1.6%. In China, the Shanghai Composite ended down 1.2%, while the Hang Seng index in Hong Kong closed 0.9% lower.
In London early Wednesday, NMC Health was down 18% after two shareholders sold a combined 15% stake in the UAE-focused healthcare provider.
Saeed Al Qebaisi and Khalifa Al Muhairi sold 31.2 million shares in NMC at a price of 1,200p each, raising USD493 million. The two also sold 40.5 million shares in Finablr, representing a 6% stake.
The share sales were carried out in order to reduce outstanding indebtedness of themselves and other corporate entities owned by them under borrowings raised by Nov Partners Investment.
NMC was founded by entrepreneur BR Shetty, whose controlling partners in the business are two Abu Dhabi investors, Al Qebaisi and his relative Al Muhairi. Shetty also set up UAE Exchange, a chain of remittance houses, which expanded into Finablr.
Finablr shares were down 12%.
Finablr, separately, on Wednesday said travel money unit Travelex has been successful in containing the spread of ransomware known as Sodinokibi, which was detected on New Year's Eve.
Travelex confirmed that whilst there was some data encryption, there is no evidence that "structured" personal customer data has been encrypted, and also no evidence that any data has been stolen.
Travelex is gradually restoring a number of internal systems and is working to resume normal operations as quickly as possible, said Finablr.
Smiths Group was up 1.1% after Bank of America boosted the engineering firm to Buy from Underperform.
Bank of America also cut asset manager Standard Life Aberdeen to Neutral from Buy, the stock down 1.9% in early trade. Standard Life closed down 3.4% on Tuesday after receiving ratings downgrades from Exane BNP and JPMorgan.
Sirius Minerals soared 31% to 5.39p on news it is in advanced talks with blue-chip miner Anglo American about a possible takeover over.
The talks regard a possible cash offer of 5.50p per Sirius share, which represents a 34% premium to the firm's last closing price of 4.10p. Based on this last closing price, shares in Sirius have slumped more than 80% over the past 52 weeks.
The offer would value Sirius at a whole at GBP386 million.
There can be no certainty that any firm offer will be made, said Sirius, though the board has indicated to Anglo that it expects to be able to recommend an offer if made at the proposed price.
Anglo confirmed the talks, saying it identified the project as being "of potential interest some time ago". The possible offer could bring "certainty" to Sirius shareholders whilst Anglo brings "financial, technical and marketing resources and capabilities" to progress to project.
In September, Sirius announced it had struggled to secure the required funding for its North Yorkshire polyhalite mine due to "market conditions". Consequently, the firm intended to slow the development of the mine. Sirius then came up with a two-stage development plan to a de-risk milestone of first polyhalite, with an upfront capital requirement of USD600 million.
Anglo American shares were down 1.4%.
In the economic calendar on Wednesday, is eurozone consumer confidence at 1000 GMT and Irish retail sales at 1100 GMT. In the US there is the ADP employment report at 1315 GMT, a precursor to Friday's nonfarm payrolls.
Already released, German new factory orders were down in November, the country's Federal Statistics Office said, with foreign orders falling sharply.
In November 2019, price-adjusted new manufacturing orders were down 1.3% compared to October and were down 6.5% compared to November 2018.
Market consensus, according to FXStreet, was for a 0.3% rise in orders.
"All in all, there are still no signs at all of a bottoming out for German industry. Instead, the free fall continues. In fact, there is simply one word to describe the current state of the German industry: 'dire'," said Carsten Brzeski at ING.
The euro was quoted at USD1.1137 early Wednesday following the data, flat with USD1.1138 late Tuesday.
Elsewhere in forex, sterling was quoted at USD1.3150 early Wednesday, up from USD1.3118 at the London equities close on Tuesday. Against the yen, the dollar was quoted at JPY108.45 versus JPY108.59.
By Lucy Heming; lucyheming@alliancenews.com
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