MARKET COMMENT: UK Stocks Down Ahead Of Fed Minutes As Concerns Linger

LONDON (Alliance News) - UK stock indices are trading lower Wednesday, amid lingering concerns over slowing eurozone growth and the spread of Ebola, and as investors await the latest Federal Reserve policy minutes.

By mid-morning Wednesday, the FTSE 100 is down 0.5% at 6,461.10, the FTSE 250 is down 1.2% at 14,921.24, and the AIM All-Share is down 1.0% at 728.77. In Europe, the French CAC 40 is down 0.4%, and the German DAX is down 0.8%.

An adviser to the World Health Organisation has warned that more Ebola cases can be expected among medical staff, even in developed countries with modern health care systems. The comments came as EU member states get ready to discuss the Spanish case with health experts, including representatives of the WHO and the European Centre for Disease Prevention and Control.

Europe's first transmitted case involved a 44-year-old Spanish nurse who helped care for a missionary transported to Madrid after contracting the Ebola virus in Liberia. Fifty-two people the nurse came into contact with are also under surveillance. Spanish authorities do not know how she contracted the virus, but medical workers' unions had complained earlier that precautionary training and equipment for the Ebola medical team was lax. The EU commission wants to know exactly what happened,

Airline, travel and hotel industry stocks fell Tuesday on the news of the Spanish case, and are down again Wednesday, to a lesser extent.

TUI Travel is down 2.5%, easyJet is down 1.7%, Intercontinental Hotels Group is down 1.6%, and British Airways owner International Consolidated Airlines Group is down 0.6%.

EasyJet got a boost in previous days from a strike that affected Air France last month, as passengers transferred on to the British airline's French operations. Air France-KLM shares have fallen Wednesday after it estimated the cost of two-week pilot strike at up to EUR500 million, and said September passenger number fell 16.3% to 5.7 million. However, this hasn't given easyJet a lift this time amid the Ebola worries hitting the wider sector.

Tesco leads the FTSE 100 gainers for a second consecutive day, up 1.7%. The troubled supermarket is the worst performing stock in the FTSE 100 so far this year, but was buoyed Tuesday by reports that it was attracting suitors for its clubcard loyalty scheme subsidiary, and has risen Wednesday after The Times reported that investors were supportive of a potential rights issue and as HSBC raised Tesco to Neutral from Underperform. J Sainsbury is also up 2.1%, and Wm Morrison Supermarkets is up 0.4%.

GKN is the worst FTSE 100 performer, down 3.8% after Bank of America Merrill Lynch downgraded the automobile parts group to by two notches to Underperform, from Buy.

Support services and construction company Interserve leads the FTSE 250 gainers, up 3.1%, after being upgraded to Buy from Hold by analysts at Peel Hunt.

At the other end of the mid-cap index, Paypoint is the worst performer, down 5.7% after being downgraded by Barclays to Underweight from Equalweight. It is apparent that technology investors are "concerned about the European outlook," Barclays says in a note to clients.

UK house prices rose 9.6% year-on-year in September, in line with expectations, according to the latest Halifax house price data. On a monthly basis, the average house price in the UK rose by 0.6%, up from the flat index reading in August and faster than the 0.2% rise that had been expected.

The data has had little impact on the markets, with major currency pairs trading tight ranges ahead of the release of the Fed minutes at 1900 BST. The pound currently trades at USD1.6085, and the euro trades at USD1.2674.

There's no UK or European data left to come Wednesday, leaving the markets focused on the Wall Street open and the start of third quarter earnings there ahead of the release of the Fed minutes at 1900 BST.

Warehouse retailer Costco Wholesale has already beaten earnings estimates, reporting earnings of USD1.58 a share compared with consensus of USD1.52 a share.

US futures currently indicate a mixed start for the major US indices, with the DJIA pointed flat, the S&P 500 fractionally lower, and the Nasdaq Composite up 0.1%.

By Jon Darby; jondarby@alliancenews.com; @jondarby100

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