LONDON (Alliance News) - The London main market is trading lower Tuesday, following a weak close in the US and Asian markets and a downward revision to global growth forecasts by the Organization for Economic Cooperation and Development.
Meanwhile, AIM is bucking the trend to record gains, buoyed by strong small-cap company fundamentals.
By mid-morning Tuesday the FTSE 100 is down 0.6% at 6,682.83, the FTSE 250 is down 0.4% at 15,234.68, while the AIM All-Share is up 0.4% at 813.23.
Slowing growth in emerging economies and brinkmanship over the US debt ceiling could harm the global economic recovery, the OECD warned Tuesday. The Paris-based organisation of the world's largest advanced economies said the global economy will expand by 2.7% this year and 3.6% in 2014, compared with estimates of 3.1% and 4.0%, made in May.
There was good news for the UK, however, where the projection for growth in 2014 was revised up to 2.4% from 1.5%, the largest upgrade to any country in the OECD. The projection for this year was revised up to 1.4%, from 0.8%.
"The OECD have revised their forecast for UK GDP up by more than any other G7 country over the next two years. This provides more evidence that the UK?s hard work is paying off and the country is on the path to prosperity. Today?s report also highlights the risks that remain to the recovery and urges the UK to stick to the government?s plan that is growing the economy, lowering the deficit and inflation, and creating jobs. This is the only sustainable way to raise living standards for hardworking families", says a UK Treasury spokesman.
The German ZEW Economic Sentiment Survey came in at 54.6, marginally higher than the 54.0 expected and up from 52.8 recorded previously. The number for the whole eurozone also increased, to 60.2 from the last reading of 63.1, but fell short of economists expectation on 63.1.
The dollar is a little firmer across the board on the back of the disappointing global growth forecasts from the OECD, although price movement remains fairly muted ahead of central bank releases due later in the week. The pound is down slightly against the greenback at USD1.6095 while the euro is quoted at USD1.3495.
A busy day in the UK corporate calendar sees easyJet bucking the equity market trend to trade 6.2% higher by mid-morning. The low-cost airline released full-year results in line with expectations and also announced a 44.1p special dividend. Following share price weakness on the back of profit warnings from Ryanair, easyJet is making up ground, as it hasn't seen the same level of pricing weakness as its competitor.
Intertek is the biggest falling blue chip stock, down 4.3% after announcing its latest acquisition. Intertek has now spent over GBP120 million on acquisitions this year following the latest move to buy one of the largest building products testing companies in North America, New York-based Architectural Testing Inc, for USD95 million in cash.
Afren is the biggest gainer in the FTSE 250, up 8.5%, while Lekoil, up 20% is one of the biggest AIM-listed gainers, following the announcement that drilling results at a site offshore Nigeria show recoverable resources are almost four times higher than previous expectations. Afren and Leokil have a 40% and 30% economic interest in the site, respectively.
AIM-listed Sierra Rutile also is helping the alternative market outperform the main indices. The metals and mining company confirmed that it is currently engaged in discussions with potentially interested parties for the possible takeover. Although no details have been provided, shares are up more than 23%.
Still to come Tuesday, there is a speech from the US Treasury Secretary Jack Lew at 1345 GMT, while the 1355 GMT the weekly Redbook of US retail sales is scheduled.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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