LONDON (Alliance News) - UK stocks are marginally lower Tuesday, as UK economic data comes in on the soft side and Bank of England Governor Mark Carney and three other members of the Monetary Policy Committee face questions from the Treasury Select Committee.
By mid-morning Tuesday, the FTSE 100 is down 0.3% at 6,667.10, the FTSE 250 is marginally higher at 16,453.30, and the AIM All-share is down 0.2% at 895.43.
"A bounce in Chinese equities after yesterday?s rout wasn?t enough to convince UK markets this morning, with equities selling off hard on the open. The Ukraine situation continues to rumble with no conclusion which doesn?t help sentiment," said CMC Markets senior trader Toby Morris.
It is a mixed picture in Europe, where morning data has shown Italian GDP falling faster than expected but German import and export growth stronger than expected. The DAX 30 is flat, while the CAC 40 is down 0.4%.
UK industrial production growth accelerated to 2.9% year-on-year in January from the 1.9% growth recorded in December. Economists had expected growth to reach 3.0%. On a monthly basis, production grew by just 0.1%, less than the 0.2% expected and falling from the 0.5% recorded in December.
Manufacturing production on the other hand grew by 0.4% in the month of January, faster than the 0.3% growth expected by economists. Year-on-year, manufacturing production grew by 3.3% in January, in line with expectations and accelerating from 1.4% in December.
Retail sales growth in the UK declined sharply in February, according to the British Retail Consortium sales monitor. The measure of the value of sales from participating retailers increased by just 0.7%, notably weaker than the 5.4% gain seen in January. Data showed that on a like-for-like basis, retail trade decreased 1% annually in February, after rising 3.9% in January. Economists had forecast a 1.6% gain for February.
Broken down, the data shows that non-food materially outperformed the food category, says Shore Capital analyst Clive Black. In the three months of December 2013 to February 2014, non-food sales increased by 4.7%, with food sales only 0.4% ahead. Industry like-for-like sales increased by 1.2%, with non-food sector sales up 3.5% but food sales down 1.7%.
The data adds to current concerns over supermarket pricing. Morrison is a big faller for the second consecutive day after weekend reports that the supermarket is expected to announce big price cuts with its results on Thursday. Morrison is down 2.2% Tuesday, with Sainsbury also down 1.4% and Ocado down 0.3%. The Food Producers sector is also lower, with Unilever leading the falls, down 1.3%.
Bucking the retail trend, Sports Direct leads the blue chip gainers, up 2.5% amid the news that it's looking to approve a no-cost option issue to give founder Mike Ashley an extra 1.3% stake in the company.
The major UK banks are lower Tuesday, with Barclays leading the FTSE 100 fallers, down 2.9%. Amid reports that a US investment banking firm has filed a lawsuit against the five banks, including Barclays and HSBC, that set the London benchmark gold price, Carney and his colleagues also are sitting to face questions from MP's on the ongoing forex fixing investigation.
Carney, Paul Fisher, David Miles and Martin Weale have so far been questioned about the recent adjustment of forward guidance to focus on spare capacity in the economy rather than the unemployment rate. The panel have largely reiterated what they see as the new focus for the MPC, and Carney admitted that he would have liked to have published statistics on how the central bank sees the output gap narrowing over time, but lacked support from other members.
The pound has been jumping around a little on the panel's comments, but is relatively unchanged against the dollar overall Friday, currently trading at USD1.6635. The Euro is lower against the dollar, currently trading at USD1.3845.
Precious metal prices are ticking up, with analysts citing continuing concerns over the situation in Ukraine. Gold is up about USD6 since European equity markets opened, currently trading at USD1,348.00 per ounce. Silver also is higher, currently trading at USD21.00 per ounce.
Still to come Tuesday, US the NFIB business optimism index at 1130 GMT, followed by the US Redbook index at 1255 GMT.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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Barclays (BARC)
Ocado (OCDO)
Sainsbury's (SBRY)