LONDON (Alliance News) - UK stock markets trade flat to slightly lower as the Syria situation rumbles on without resolution, and the next FOMC meeting and potential QE tapering comes back into view.
By mid-morning Friday the FTSE 100 is down 0.3% at 6,571 points, while the FTSE 250 at 15,183 and the AIM All-Share at 780 are about flat.
The currency markets are quiet, waiting for the main risk event, US PPI and retail sales at 1330BST. The pound remains strong against the dollar, holding at about 1.58.
Gold and oil prices soften a little as the diplomatic process on Syria looks like it could take a while, meaning no concern over oil supply for now. The price of a barrel of Brent has been below USD111.00 Friday for the first time in three weeks.
The process of Syria surrendering chemical may not be straightforward. Syrian President Bashar al-Assad announced to Russian broadcaster Rossia 24 that the process of surrendering the Syrian government's chemical arsenal would begin in 30 days when information about the weapons will be released. However, he also said the initiative could only work if the US stops its threats of military strikes. US Secretary of State John Kerry immediately rejected the proposed 30-day timetable, giving traders little indication as to what the next move will be.
Airline stocks that would normally be gaining on a day when the price of oil is falling have been hit by a profit warning from Air Lingus. Following in the footsteps of Ryanair, the Irish airline said that a fall in bookings during July and August and fierce competition that is forcing down fares means it is likely to miss its earnings forecast. Air Lingus shares have dropped 7.9% in early trade, while Ryanair is down 2%, easyJet 2.4% and International Consolidated Airline 1.8%.
Mining stocks are losing ground on the back of the softening gold price. The FTSE 350 sector is down 2.1%, led by big names BHP Billiton, down 1.9% and Rio Tinto, down 2.1%.
Household goods is the biggest gaining sector, up 1.8%. The rise is led by Barratt Developments trading up 2.4% following broker upgrades after the house-builder reported results Thursday.
The main releases in the data calendar still to come Friday are the US producer price index and retail sales, due at 1330BST. Retail sales are expected to have increased by 0.4%, up from 0.2% last month.
Asia stocks fell as they headed into the weekend. Market holidays in the Asian calendar Monday may have encouraged some profit-taking ahead of Wednesday's FOMC meeting in the US. In the absence of further Syria updates, talk about tapering of the US quantitative easing program will take centre stage.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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