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(Alliance News) - London's FTSE 100 went into Tuesday afternoon in the red, hurt by a stronger pound, though European peers were in better shape ahead of a key US inflation reading.
The FTSE 100 index fell 30.70 points, 0.4%, at 7,395.13. Telecommunications firms and tobacco put pressure on the large-cap benchmark.
The FTSE 250 was up 66.43 points, 0.4%, at 17,980.08, and the AIM All-Share was up 0.40 of a point, 0.1%, at 701.27.
The Cboe UK 100 was down 0.4% at 738.27, the Cboe UK 250 was up 0.5% at 15,555.67, and the Cboe Small Companies was up 0.6% at 13,046.89.
In European equities on Tuesday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was up 0.4%.
Stocks in New York are called to open higher. The Dow Jones Industrial Average and S&P 500 are called up 0.1%, while the Nasdaq Composite is called up 0.2%.
The euro traded at USD1.0718 early Tuesday afternoon, up from USD1.0696 at the London equities close on Monday. Against the yen, the dollar was quoted at JPY151.72, up versus JPY151.59.
"The dollar risks another correction event today as inflation may slow a bit more than expected, even though core stickiness should prevent a major repricing of rate expectations," analysts at Dutch bank ING commented.
"The stickiness in core inflation should prevent a major swing in the Federal Reserve narrative – which has been focused on reiterating its hawkish bias of late – but does surely raise the chance of one of those dollar position-squaring events that we have witnessed around key US data releases in recent months."
The US annual consumer inflation rate is expected to have eased to 3.3% in October, from 3.7% in September. The data is released at 1330 GMT.
Focus this week will also be on the US consumer, with earnings from the nation's most ubiquitous retailers on the docket this week.
Home Depot kicked things off by reporting a decrease in third-quarter sales. The home improvement retailer also narrowed its outlook.
Net sales in the third-quarter ended October 29 fell 3.0%, it said. Net earnings were 12% lower.
It now expects full-year sales and comparable sales to decline between 3% and 4%. It had previously predicted a decline between 2% and 5%.
Home Depot shares were 1.7% higher in New York during pre-market trade.
As the week progresses, there are numbers from Target, Walmart and Ross Stores.
In London, Vodafone fell 2.7%, among the worst FTSE 100 performers. The Newbury, Berkshire-based telecommunications provider said pretax profit in the six months to September 30 dived to EUR550 million from EUR1.69 billion a year prior. Revenue fell 4.3% to EUR21.94 billion from EUR22.93 billion.
It swung to a net loss of EUR155 million, from profit of EUR1.20 billion.
"Vodafone's results are a checklist of everything bad about a company. It has swung to a loss-making position, revenue is down, the dividend is not growing and there is negative free cash flow," AJ Bell analyst Russ Mould commented.
BT fell 1.6% in a negative read-across.
Imperial Brands fell 0.8% as its annual revenue shrunk ever-so-slightly on weaker volumes. In the financial year that ended September 30 it brought in revenue of GBP32.48 billion, edging down 0.2% from GBP32.55 billion a year before.
Pretax profit rose 22% to GBP3.11 billion in the recent year from GBP2.55 billion the year before.
On the back of the positive results, Imperial Brands raised its dividend per share was raised 4.0% to 146.82 pence from 141.17p.
Peer British American Tobacco gave back 1.6%.
Also among the FTSE 100's fallers, consumer goods firm Reckitt fell 1.1% and packaging company Mondi declined 1.4%.
The index's international earners were under pressure as the pound climbed. Sterling was quoted at USD1.2281 early Tuesday afternoon, higher than USD1.2264 at the London equities close on Monday. The pound had traded as high as USD1.2307 on Tuesday afternoon.
UK unemployment was steady last month, though bonuses drove up wages by more than expected, figures from the Office for National Statistics showed.
The unemployment rate for the period from July to September was 4.2%, unchanged from the June to August period. The ONS began to use 'experimental' unemployment data last month, owing to a low response rate for its survey.
In the three months to September, annual growth in average total pay, excluding bonuses, was 7.7%. This was in line with market consensus, as cited by FXStreet. The figure for the previous three-month period was 7.8%.
Whilst the pace eased slightly from the prior period, the ONS noted it is still among the highest annual growth rates since comparable records began in 2001.
Including bonuses, average pay growth was 7.9%, which overshot market expectations of 7.4%. It was 8.2% in the three months to August, upwardly revised from 8.1%. The ONS noted both periods were affected by one-off payments to the civil service in July and August this year.
Analysts at Lloyds Bank commented: "The outturn in regular private sector pay was marginally softer than the 7.9% expected by the Bank of England's November forecasts. While slowing month-on-month momentum adds to the reassurance that higher interest rates are having their desired impact. However, pay growth is still far too high to be consistent with a 2% inflationary target and the upward pressure from skill shortages in a handful of sectors pose a risk to the fall back in pay growth and to the inflationary outlook."
Back in London, R&Q Insurance added 21% as it talked up its Legacy arm, which is what will remain once it sells programme management business Accredited.
The sale of Accredited to Toronto-based private equity firm Onex has shareholder approval.
"Post separation, R&Q will be a refocused, global Legacy insurance business," R&Q said, adding that unit has a "significant" market opportunity.
It targets growing Legacy fee income, cutting costs and also noted the possibility of non-core asset sales.
It predicts Legacy will return to profit in 2025.
Gold was quoted at USD1,945.55 an ounce midday Tuesday, little changed from USD1,945.38 on Monday. Brent oil was trading at USD82.28 a barrel, edging lower from USD82.39.
By Eric Cunha, Alliance News news editor
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