LONDON MARKET MIDDAY: Italy, Spain Woes Dent Stocks; Dixons Drops 20%

LONDON (Alliance News) - Stocks in London were seeing a disappointing session on Tuesday as the market re-opened from Monday's bank holiday, with the FTSE 100 hitting its worst level in nearly three weeks.Sentiment in Europe was knocked by political uncertainty arising Italy and Spain, with the former set for fresh elections after an unsuccessful coalition attempt and the prime minister of the latter facing a vote of no confidence.Meanwhile, oil majors in London were among those falling on Tuesday, amid worries OPEC will seek to ease production cuts to counter sanctions against Iran and Venezuela. The FTSE 100 was down 1.2%, or 95.56 points, at 7,634.72 Tuesday midday. The large-cap index hit an intraday low of 7,610.66 earlier in the session, its worst level in nearly three weeks.The mid-cap FTSE 250 index was down 1.5%, or 324.50 points, at 20,786.03. The AIM All-Share index was down 0.7% at 1,080.34.The Cboe UK 100 index was down 1.4% at 12,932.03. The Cboe UK 250 was down 1.7% at 18,993.84, and the Cboe UK Small Companies down 0.2% at 12,681.56.Stocks in mainland Europe at midday were also sharply lower, with the CAC 40 in Paris down 1.3% and the DAX 30 in Frankfurt 1.4% lower."Stock markets in Europe are getting hammered today as political uncertainty in Italy and Spain has soured sentiment," commented David Madden, market analyst at CMC Markets.Italian President Sergio Mattarella on Monday tasked economist Carlo Cottarelli with forming a government, after an unsuccessful attempt by the anti-establishment Five Star Movement and the anti-immigrant League to form a coalition.The move came after the two Eurosceptic parties dropped their bid to form a governing alliance on Sunday, increasing the odds of fresh elections as Italy struggles to overcome the political stalemate produced by March election.Adding to heightened uncertainty in Europe, Spanish Prime Minister Mariano Rajoy will face a vote of confidence on Friday."With markets transfixed on affairs in Italy and Spain (amid a vote of no confidence for Rajoy), we are seeing a sharp shift into safe haven assets," said IG market analyst Joshua Mahony, noting that Fresnillo and Randgold are the best performers in the FTSE 100 "amid a shift into gold."Among few risers in the FTSE 100 on Tuesday, Fresnillo was the best performer, up 2.8% while Randgold Resources was up 1.1%.Gold was quoted at USD1,303.84 an ounce Tuesday midday, flat compared to USD1,303.52 late Friday but continuing to trade around its best levels of the past fortnight.In second place to Fresnillo, Smiths Group was 2.7% higher after it confirmed over the weekend it is in "very early stage" talks over merging its medical unit with Nasdaq-listed ICU Medical. Smiths said there is no certainty a deal will be reached. ICU Medical, which is based in California, has a market capitalisation of around USD5.60 billion. The stock hit an all time high of 1,803.00 pence in early trade. Among those losing on Tuesday were oil majors, as the price of oil fell to USD75.52 at midday from USD77.07 late Friday.Royal Dutch Shell 'A' shares were down 1.8%, 'B' shares down 1.8% and BP shares 1.4% lower."Oil prices are heading lower as markets brace themselves for the option that Saudi Arabia and Russia, the two largest producers of black gold, might increase production by 1 billion barrels a day between them to cover a potential shortfall," said Fiona Cincotta, senior market analyst at City Index."The two oil big hitters started having discussions about pumping more oil as Iran, member of the oil cartel OPEC, heads for potential export problems in the wake of intensified US sanctions against the country initiated by President Trump. Fellow OPEC member Venezuela could also end up facing sanctions from the EU over claims that its recent election was neither free nor fair," Cincotta added.Royal Bank of Scotland was 3.3% lower at midday, making it the worst FTSE 100 performer. Sky News said the UK government is likely to sell a multi-billion pound stake in the lender as soon as this week.Sky News, citing a city analyst, reported that a disposal could target proceeds of more than GBP3.00 billion, equating to roughly a 10% stake in the bank.In the FTSE 250, IWG was 2.2% higher after Prime Opportunities Investment Group said it approached the Regus office provider regarding a possible cash takeover bid, which was rejected.Prime Opportunities did not provide any financial details of its offer but said it will continue to "actively" consider the possibility of making a new offer for IWG. However, it emphasised that there is no certainty such an offer would be made.At the bottom of the index was Dixons Carphone, sinking 20% as it sees profit tumbling for its recently-ended financial year, and a further fall to come in the year ahead."Often when a new chief executive joins a company, particularly if has faced operational challenges or is in a difficult sector, he will look to rebase expectations. Eight weeks in to his tenure at electronics retailer Dixons Carphone, chief executive Alex Baldock has followed this playbook to the letter," said AJ Bell investment director Russ Mould.The mobile phone and electrical goods retailer said headline pretax profit for the year ended April 28 is set to fall to GBP382 million from GBP501 million last year, due to declining market conditions, reduced profit margins, and expensive network contracts in the UK.Further, profit for the year ahead is set to decline as well, expected at around GBP300 million. This fall includes "early, necessary action" to correct recent under investment in its customer proposition, with market and contractual pressures in UK Mobile to be partially offset by cost improvements.Vedanta Resources was down 3.2% after the Indian copper miner said its Vedanta Ltd unit has now received a copy of an order from an Indian state to permanently close the Tuticorin copper smelter plant. The order was issued by the government of Tamil Nadu directing the Tamil Nadu Pollution Control Board to seal Vedanta's Copper Smelter Plant 1 located in the Thoothukkudi district of the state and to close the plant permanently. In a separate statement, Vedanta also said State Industries Promotion Corp of Tamilnadu has cancelled 342.2 acres of land allotted for the company's proposed Copper Smelter Plant 2 at Thoothukkudi district. The price paid for the land will be refunded by the state-owned investment company.Stock prices in New York on Tuesday were pointed to a lower open. The Dow Jones Industrial Average was called down 0.6%, with the S&P 500 also pointed 0.6% lower and the Nasdaq Composite off 0.4%. More than 8,000 Starbucks coffee shops in the US will be closed Tuesday afternoon so that employees can undergo racial bias training.The company announced the training just days after an incident in April in a Starbucks in Philadelphia in which two black men were arrested while waiting for a friend. An employee called police because the men, who had not made a purchase, refused to leave after they were denied use of the toilet.In the economic calendar on Tuesday, in the US, the S&P/Case-Shiller home price index is due at 1400 BST, and consumer confidence at 1600 BST.