LONDON (Alliance News) - UK stock indices lost ground first thing Tuesday, but have once again lost momentum, flat-lining in to the US open on the eighth day of the partial US government shut-down.
The FTSE 100 is down 0.7% at 6,391.10, the FTSE 250 is down 0.2% at 14,745.20 and the AIM All-Share is down 0.5% at 777.79.
In the last couple of hours, data showed German industrial orders fell and exports grew less than forecast in August, as the recovery in Europe's biggest economy continued at a slow pace. While the statistics office said monthly exports climbed 1%, the Ministry of Economics said total factory order books declined by 0.3%. Analysts had expected the data would show exports gaining 1.1% after they fell 0.8% in July, while factory order books had been expected to rebound from a slump in July to expand by 1% in August.
The extension of the UK Government's Help to Buy scheme came into effect today, with several banks including Lloyds, RBS and HSBC launching mortgage products tailored for the scheme. George Osborne quickly turned to twitter to spread the news, saying "Virgin and HSBC confirm today they're participating in #helptobuy - joining Aldermore, Bank of Scotland, Natwest, Halifax and RBS".
Some choppy movements in the forex markets but the euro and sterling both generally range bound, still strong against the dollar as uncertainty over the cost of the US shutdown continues to weigh on the greenback. Currently, the pound trades at USD1.6105 and the euro at USD1.3575.
Gold is a little softer, currently USD1,316.50 an ounce, while the price of a barrel of oil has risen slightly to USD110.20.
The European Parliament has agreed to move forward with stricter tobacco rules, setting the stage for negotiations with EU governments. The parliament recommended that 65% of tobacco products be covered with health warnings and also endorsed a proposed ban on menthol cigarettes, but with a five-year derogation.Lawmakers, however, rejected a ban on slim cigarettes and a bid to have e-cigarettes regulated as a medical product.
There has been no conclusive impact on the FTSE 350 tobacco sector index so far, which holds on to gains of 0.4%, with British American Tobacco up 0.9% and Imperial Tobacco down 0.9%.
Industrial metals are the biggest gainers, up 0.7% while retailers are the biggest losers, down 1.5%. M&S, down 2.9%, continues to lead retailers, and the FTSE 100, lower. Bernstein Research downgraded the high street chain to Underperform after finding the company's key demographic of 50-70 year old women will be unlikely to buy as much of their new and more expensive clothing range.
US small business sentiment edged lower in September, data from the National Federation of Independent Business showed. The NFIB small-business optimism index fell to 93.9 from a corrected 94.1 in August. Meanwhile the US Redbook of retail sales, just released, shows an increase of 3.3% year-on-year for the week ended October 5.
Data releases are being overshadowed by the budget impasse however and ahead of the New York Bell, US futures are barely moving. After a sell off Monday there's a cautious mood on Wall Street and all major indices are set to open close to flat.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
Copyright 2013 Alliance News Limited. All Rights Reserved.
Marks & Spencer (MKS)
British American Tobacco (BATS)