FTSE opens lower on new Middle East tensions
The FTSE 100 index edged lower on Tuesday on fresh tensions in the Middle East and as lower copper prices saw miners turn in another weak start.
The market fell from a steady start after witnesses reported smoke rising and heavy gunfire from the area housing the U.S. embassy in central Damascus and after Palestinian gunmen fought gun battles with Israeli troops inside the Gaza Strip, with Al Jazeera television reporting one soldier had been killed.
Things look a little jittery this morning as reports filter slowly out of the Middle East, said one trader.
Miners BHP Billiton, Antofagasta, Rio Tinto and Kazakhmys dominated the list of leading losers, falling around 1 percent as copper extended its recent decline.
The torrid week for miners continues, said a second trader. Base metals have failed to respond to more stability in oil overnight.
Oil producer Royal Dutch Shell also fell 1 percent despite firmer crude oil prices as investors continued to bet strong OPEC production would see prices fall further, traders said. BP outperformed its rival, falling 0.4 percent after announcing it will be able to restart 105,000 barrels per day of production from the eastern side of Prudhoe Bay within a few weeks after Alaska regulators approved the oil major's plan to connect the field to the nearby Endicott pipeline.
By 0745 GMT, the FTSE 100 was down 20 points, or 0.34 percent, at 5,830.8. U.S. stock index futures were pointing to a weaker start for Wall Street.
INFLATION EYED
Traders said the UK market would eagerly watch inflation data when August CPI is released at 0830 GMT for signs of the future direction of interest rate movements.
The PPI data yesterday showed a bigger than expected fall so too soft a CPI reading today may raise concerns that the recent Bank of England rate hike was perhaps a little premature, whilst anything overly bullish stands to reignite inflationary fears and either way this would end up weighing on stocks, said Matt Buckland, trader at CMC Capital Markets in a note.
Drax, which owns Europe's largest coal fired power station, fell 2.2 percent despite saying first half earnings had more than tripled after wholesale electricity prices continued to soar. Analysts were looking for a slightly bigger rise.
Partygaming shed 2.4 percent as investors continued to eye the gaming sector nervously in the wake of the arrest of Sportingbet's chairman amid a crackdown on Internet gaming in the U.S.
BAE Systems rose 1.1 percent after setting Oct. 4 as the date for an extraordinary general meeting for shareholders to vote on the proposed sale of its 20 percent stake in planemaker Airbus.
And drug-maker AstraZeneca rose 0.6 percent after HSBC increased its target price on the stock.
Among the mid caps aerospace and defence engineering firm Cobham Plc rose 2.9 percent after posting a 12.7 percent rise in underlying earnings before tax and said disposals had left it well prepared for fresh acquisitions while engineering firm Charter Plc climbed 5 percent after reporting a 55 percent rise in first half profit on strong sales in Europe and North America and saying its full year results would better previous expectations.
But medical equipment maker Gyrus fell 3.8 percent despite first half adjusted earnings coming in at the top end of forecasts on Tuesday. The company was optimistic about the full year but it noted the negative impact of a weaker dollar.
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