LONDON (Alliance News) - Stocks across Europe trade lower mid-morning Tuesday, with concerns about Greece continuing to weigh on investor confidence, while the pound was boosted by upbeat UK economic data.
Having opened modestly higher, the FTSE 100 now trades down 1.0% at 6,884.76, the FTSE 250 is down 0.4% at 18,150.20, and the AIM All-Share is down 0.4% at 773.13.
In Europe, the CAC 40 in Paris trades down 1.0%, and the DAX 30 in Frankfurt is down 1.1%.
Investors are intrigued by the meeting between leaders on Monday including German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker to discuss the Greek debt problems, as well as youth employment and new energy policy. The meeting came ahead of Greece's looming deadline for a EUR300 million payment to the International Monetary Fund on Friday.
"The creditor dream team of Merkel, Hollande, Juncker, [European Central Bank President Mario] Draghi and [IMF chief Christine] Lagarde met last night to discuss, amongst other things, the Greek debt saga. However, at present, signs of any kind breakthrough remain elusive, despite the fab five urging Greece to show more 'intensity' in its pursuit of a deal," says Connor Campbell, financial analyst at Spreadex.
"Reports are suggesting that Monday night?s meeting should yield a fresh set of proposals at some point this week, presumably before Friday, with the aim of breaking the months-long deadlock," the analyst adds.
The pound has recovered all of its early losses against the dollar following better-than-expected economic data and trades the dollar at USD1.5234. UK mortgage approvals increased to a 14-month high in April, the Bank of England said. The number of mortgages approved for house purchases rose more-than-expected to 68,076 in April from 61,945 in March. This was the highest level since February 2014. It was forecast increase to 63,500.
Markit construction purchasing managers' index also surprised to the upside, coming in at 55.9 in May, recovering some of the lost momentum in April when the number fell to a 22-month low of 54.2. May's reading also surpassed expectations of a rise to 55.0, and well above the 50.0 level which marks an expansion.
The euro also rose against its major trading partners after a report showed inflation in the eurozone region accelerated faster than expected and turned positive for the first time in six months. The preliminary reading of the harmonized index of consumer prices rose 0.3% year-on-year in May, faster than the 0.2% growth expectation and the flat reading seen in April.
Core consumer prices, which excludes the volatile components such as food, energy, alcohol and tobacco, rose 0.9% year-on-year in May from a 0.6% rise in April. Economists had expected core prices to edge up 0.7%.
The euro had initially experienced a fall Tuesday when German unemployment declined by less than expected in May. The Federal Labor Agency reported unemployment declined by a seasonally adjusted 6,000 in May. It was forecast to fall by 10,000. The jobless rate came in at a record low 6.4%, the same rate as seen in April.
The euro currently trades the dollar at USD1.0978.
Tobacco giants British American Tobacco, down 2.5%, and Imperial Tobacco Group, down 2.5%, are the biggest fallers in the FTSE 100. BAT confirmed that its Imperial Tobacco Canada subsidiary was amongst three companies ordered to pay CAD15.6 billion in a case that has been running for 10 years in which smokers claimed the companies failed to warn them of the risks associated with smoking. Imperial Tobacco Group is unconnected to Imperial Tobacco Canada but its shares are likely to be suffering from industry-wide read-across from the judgement.
Wolseley is the biggest of a handful of gainers in London's blue-chip index, trading up 1.9%. The building products company said it expects to meet analysts' expectations for its trading profit in the current financial year after reporting strong growth in the third quarter of the year, driven by like-for-like sales growth, acquisitions, and an exchange rate boost.
AO World shares trade down 4.1%. The on-line white-goods seller reported Tuesday a narrowed pretax loss and rise in revenue in its recently-ended financial year as it recovered from costs associated with its initial public offering in London the previous year, but said it missed its earlier financial expectations due to a weaker-than-expected sales performance in the fourth quarter.
AMEC Foster Wheeler, down 2.8%, warned its scope revenue will be "modestly" lower in 2015 than in 2014 and that its trading margin will suffer a "further modest reduction" compared to its previous guidance, as challenging conditions in the upstream oil and gas industry continues. The FTSE 250-listed oil services company also said its expects trading profit to be more second half weighted than in 2014.
Still ahead in the economic calendar are the US Redbook index at 1355 BST and US factory orders at 1500 BST.
Futures indicate Wall Street for a lower open, with the DJIA and S&P 500 pointed down 0.6% and the Nasdaq 100 down 0.8%.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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