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London markets finish in red as traders await central bank decisions

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London stocks dipped amid caution over potential interest rate decisions (Victoria Jones/PA) (PA Archive)
London stocks dipped amid caution over potential interest rate decisions (Victoria Jones/PA) (PA Archive)

London’s markets closed lower on Wednesday amid trading caution over interest rate decisions at two key central banks.

Experts awaited potential tapering at the Fed’s key meeting later in the day stateside, while there was also apprehension that interest rates could be hiked by the Bank of England on Thursday.

The FTSE 100 closed 25.92 points, or 0.36%, lower at 7,248.89 on Wednesday.

Chris Beauchamp, chief market analyst at IG, said: “Quiet has dominated throughout the day as markets await today’s FOMC (Federal Open Market Committee) meeting and the expected tapering of asset purchases.

“Fed days are never the busiest, and with so much on the calendar over the coming two days the inevitable atmosphere is one of expectation.

“The taper itself is likely to be the non-event, and instead markets want to hear more about the outlook for inflation and growth, and any hints on interest rate rises.”

The tumbling price of oil also weighed on the FTSE, with BP and Shell stocks drifting on the back of rising US oil inventories.

Brent crude plunged by 2.93% to 82.24 dollars per barrel.

Elsewhere in Europe the other major markets outperformed the FTSE at the close for the third consecutive day despite both having shaky periods throughout the session.

The German Dax increased by 0.03%, as the French Cac improved by 0.34%.

Across the Atlantic, the US markets saw their recent rally lose steam as the S&P and Dow Jones both tipped lower despite a broadly positive set of jobs data.

Meanwhile, sterling moved higher after the latest PMI service sector figures for October showed an acceleration in growth as hospitality and retail firms continued their recovery.

The pound was 0.03% higher versus the US dollar at 1.366, and up 0.07% against the euro at 1.179.

In company news, Next saw shares slip back after the retailer said stock availability remains “challenging” amid supply chain problems and labour shortages.

The fashion and homewares chain reported third-quarter sales up 17% versus two years ago after a better-than-expected recent performance, though it still forecasts growth to slow to 10% over its final quarter amid a slight reduction in pent-up demand.

Shares moved 276p lower to 8,036p on Wednesday.

Darktrace took another tumble after its post-float lock-up period expired on Wednesday, allowing early investors to exit.

Shares fell by 32.5p to 600p amid reports that major shareholder Deep Defence will sell 11 million shares in the company now the lock-up period has ended.

Daily Mail & General Trust (DMGT) made gains after it agreed to a £850 million buyout by its largest shareholder Lord Rothermere and take the newspaper publisher private.

The company, which also owns The i newspaper, saw shares rise 32p to 1,122p after Lord Rothermere agreed to pay 255p a share, up from a 251p proposal first made in July.

Trainline slid by 22.8p to 299.6p despite revealing a recovery in passenger numbers over the past six months.

The biggest risers on the FTSE 100 were Pearson, up 17.6p at 607.6p, Fresnillo, up 24p at 876.8p, IAG, up 3.8p at 167.16p, and Smith & Nephew, up 24.5p at 1,292.5p.

The biggest fallers of the day were Darktrace, down 32.5p at 600p, Coca-Cola Hellenic Bottling Company, down 89p at 2,516p, Next, down 276p at 8,036p, and BP, down 10.1p at 334.75p.

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