(Alliance News) - London's blue-chip index edged back in early trade on Wednesday, with optimism for a vaccine unable to offset worries over the damage still being done by Covid-19 to health of the global economy.
The FTSE 100 index was down 15.44 points, or 0.2%, at 6,349.89 early Wednesday. The mid-cap FTSE 250 index was just 4.19 points higher at 19,520.36. The AIM All-Share index was up 0.5% at 1,016.93.
The Cboe UK 100 index was down 0.2% at 632.16. The Cboe 250 was up 0.1% at 16,908.05, and the Cboe Small Companies up 0.1% at 11,099.61.
"The FTSE is opening on the back foot after a lower close on Wall Street following weaker US retail sales. Signs that resurging Covid cases and the lack of fiscal stimulus is impacting on the US consumer was enough of an excuse for vaccine optimism to fade and stocks to drift lower," said City Index's Fiona Cincotta.
Weak US retail sales on Tuesday led to concerns that the global economy is set to suffer further before a vaccine is widely available.
US retail and food service sales edged up just 0.3% month-on-month in October to reach USD553.3 billion, representing a slower rate of growth than the 1.6% recorded for September. Market consensus, according to FXStreet, had pencilled in 0.5% month-on-month rise for October.
Cincotta said the retail sales data "served as a stark reminder if it was needed that there will be a lot of economic fallout from the pandemic over the coming months".
The dollar was lower early Wednesday in London.
Against the yen, the dollar edged down to JPY103.92 versus JPY104.22. The euro traded at USD1.1890, higher than USD1.1866 late Tuesday and sterling rose to USD1.3290 from USD1.3254.
Figures from the Office for National Statistics showed annual UK inflation edged up to 0.7% in October from a rate of 0.5% in September. This was better than market forecasts, according to FXStreet, of 0.6%.
Pantheon Macroeconomics, though, thinks it is too early for a sustained uptick.
"The pick-up in CPI inflation in October had several drivers, but likely is not the start of a sustained uptrend," said Samuel Tombs, chief UK economist.
In mainland Europe, the CAC 40 in Paris was down 0.5%, while the DAX 30 in Frankfurt dipped 0.4% in early dealings on Wednesday.
In London, British Land was amongst the fallers in the FTSE 100 after posting a bigger loss for its half-year.
The FTSE 100 property developer said EPRA net tangible assets fell 10% to 693p at September 30 from 773p at March 31. British Land posted a widened pretax loss of GBP757 million for the half-year to September 30, versus GBP440 million a year ago.
More positively, the company confirmed it will be resuming dividend payments with an interim payout of 8.4p. British Land back in March decided to suspend dividend payments, given the uncertain outlook, but said it has been "reassured" by the productivity of its assets when restrictions were relaxed.
British Land also said it has completed on the sale of Clarges Mayfair to Deka for GBP177 million. The sale price of the mixed-use development was 7.6% above the September valuation.
Contract caterer Compass fell 1.9% after both Goldman Sachs and UBS cut the stock to Neutral from Buy.
At the top of the risers was insurer RSA, after agreeing to be taken over in a GBP2.7 billion deal that was first announced earlier this month.
Under the deal, RSA shareholders will receive 685 pence in cash for each share, the same amount proposed earlier in November. In addition, RSA shareholders will be entitled to receive the insurer's interim dividend of 8p.
The price represents a premium of 51% to November 4's closing price in London, being the day before the announcement of Intact and Tryg's possible offer.
The deal will see Intact run RSA's Canadian, UK and international operations, while Tryg will take RSA's Swedish and Norwegian businesses. The two will co-own RSA's Danish business.
"The board of RSA is pleased to be recommending Intact and Tryg's cash offer for the company, which delivers attractive, certain value for our shareholders. The offer reflects the strength and performance of RSA during a challenging period for our industry, representing a significant premium in cash," said RSA Chair Martin Scicluna.
Croda rose 1.1% as it added to the morning's M&A news. The speciality chemicals firm has agreed to buy Fragrance Spanish Topco, trading as Iberchem, for EUR820 million.
Iberchem was founded in 1985 and is headquartered in Murcia, Spain. Around 80% of its sales are fragrances for Personal Care and Home Care products, areas where it has a "similar customer profile" to Croda.
The acquisition is expected to be earnings accretive in the first full financial year following completion, said Croda.
The consideration will be funded via a combination of Croda's existing debt facilities and the proceeds of an equity placing, representing around 8% of its issued share capital. The placing is expected to raise GBP600 million.
Turning to trading, Croda said its outlook for the full-year remains unchanged after an in-line performance in the second half so far. The full-year charge for group-wide share-based payment schemes is forecast to be higher than previously expected, it noted, due to recent share price performance.
Gold was quoted at USD1,880.58 an ounce early Wednesday, lower than USD1,887.43 on Tuesday. Brent oil was trading at USD43.79 a barrel, higher than USD43.40 late Tuesday.
The economic events calendar on Wednesday has eurozone inflation at 1000 GMT.
By Lucy Heming; lucyheming@alliancenews.com
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British Land (BLND)
Croda International (CRDA)
Compass Group (CPG)