Stocks were trading broadly flat on Tuesday morning with markets lacking direction after mixed economic data from Germany and concerns about the US economy.
The German IFO business climate indicator for the month of September edged up only slightly, yet expectations for the next six months were slightly more optimistic than expected. Business confidence increased in September to 107.7 from a revised 107.6 in August, falling below the consensus forecast for a gain up to 108.2.
On the positive side, expectations for the next six months improved more than expected as the corresponding indicator rose to 104.2 from the previous 103.3, slightly above expectations for a reading of 104.0.
"September's rise in German Ifo business sentiment confirmed that the economy is recovering, but we continue to expect [economic] growth to be reasonably sluggish over the coming quarters," said European Economist Ben May from Capital Economics.
Fed stimulus, debt ceiling in focus
Markets across the globe declined on Monday as traders continued to digest the surprise decision by the Fed last week not to begin scaling back stimulus. While St Louis Fed President James Bullard admitted that the central bank could still trim asset purchases at its next meeting, fellow official William Dudley (New York Fed) said the US has yet to show "any meaningful pickup" in momentum. He said the Fed must push hard against headwinds and he would only feel comfortable with a 'taper' as long as there is a "continued improvement in the labour market".
As the 'no-taper' rally begins to fade, the focus has turned to talks over the debt ceiling in recent days after President Barack Obama urged Congress to approve a budget to prevent a government shutdown by October 1st.
Market Analyst Craig Erlam from Alpari said that slow progress in negotiating is "nothing new" and the debate is likely to go down to the wire, as has been the case before."Despite being fully aware of this and the majority not believing for a second that Congress will allow a shutdown of government, traders continue to act with caution which truly highlights the lack of confidence in the people who run the world's largest economy," he said.
FTSE 100: Miners track metal prices lower
Mining stocks were under the weather this morning as gold, silver and copper prices edged lower. Randgold, Fresnilllo, Vedanta and Anglo American were all registering losses by midday.
Power systems firm Rolls-Royce was a high riser after Jefferies raised its target price for the stock from 1,250p to 1,400p and kept a 'buy' rating, showing optimism with its 'TotalCare' services.
Banking stocks were providing a lift this morning with Barclays and RBS making gains. Lloyds meanwhile was benefitting from a ratings upgrade by Investec from 'sell' to 'hold'. Analyst Ian Gordon said that the bank could benefit less price-led competition in the mortgage market.
FTSE 100 newcomers Sports Direct and Coca-Cola HBC were also performing well, rebounding after their recent weakness since entering the top-tier index.
FTSE 250: Euromoney jumps on Q4 pick-up
Business and financial magazine publisher Euromoney Institutional Investor surged this morning after reporting that revenue growth accelerated from 2% in the third quarter to 9% in the fourth. In a pre-close trading update, the company said that full-year adjusted pre-tax profit would be around £114m, slightly ahead of estimates.
Finance house Close Bros also gained after it reported a strong set of full-year results as Asset Management returned to profit while Banking and Securities improved.
FTSE 100 - Risers
Coca-Cola HBC AG (CDI) (CCH) 1,860.00p +1.92%
Barclays (BARC) 270.50p +1.56%
Capita (CPI) 1,007.00p +1.41%
Sports Direct International (SPD) 703.00p +1.30%
Rolls-Royce Holdings (RR.) 1,128.00p +1.17%
BAE Systems (BA.) 449.00p +1.13%
Travis Perkins (TPK) 1,625.00p +1.12%
Marks & Spencer Group (MKS) 505.50p +1.10%
WPP (WPP) 1,284.00p +1.10%
Sainsbury (J) (SBRY) 399.50p +1.09%
FTSE 100 - Fallers
Fresnillo (FRES) 985.00p -2.76%
Randgold Resources Ltd. (RRS) 4,495.00p -2.73%
Shire Plc (SHP) 2,457.00p -2.50%
Amec (AMEC) 1,085.00p -2.08%
Petrofac Ltd. (PFC) 1,386.00p -1.35%
GKN (GKN) 348.60p -0.97%
Imperial Tobacco Group (IMT) 2,267.00p -0.96%
Carnival (CCL) 2,369.00p -0.96%
Unilever (ULVR) 2,542.00p -0.94%
Smith & Nephew (SN.) 769.50p -0.84%
FTSE 250 - Risers
Euromoney Institutional Investor (ERM) 1,126.00p +7.14%
Polymetal International (POLY) 693.50p +5.40%
Diploma (DPLM) 628.50p +4.66%
Berendsen (BRSN) 904.50p +3.37%
Savills (SVS) 598.00p +2.84%
Howden Joinery Group (HWDN) 292.90p +2.81%
Close Brothers Group (CBG) 1,162.00p +2.56%
Jardine Lloyd Thompson Group (JLT) 952.50p +2.36%
Chemring Group (CHG) 313.00p +2.22%
WH Smith (SMWH) 836.00p +2.20%
FTSE 250 - Fallers
Ocado Group (OCDO) 383.90p -3.83%
Centamin (DI) (CEY) 43.60p -2.70%
Cairn Energy (CNE) 258.00p -1.68%
Evraz (EVR) 131.50p -1.50%
AL Noor Hospitals Group (ANH) 850.00p -1.39%
Lonmin (LMI) 325.70p -1.30%
Ferrexpo (FXPO) 177.50p -1.28%
Man Group (EMG) 85.00p -1.22%
Essar Energy (ESSR) 131.50p -1.13%
Moneysupermarket.com Group (MONY) 143.00p -1.04%