London close: Stocks fall ahead of Fed, BoE policy announcements

London stocks declined on Tuesday as investors sifted through a barrage of manufacturing data and looked ahead to US and UK central bank decisions this week.

The FTSE 100 closed down 0.53% to 6,917.14 points.

The pound dropped 0.11% versus the dollar at $1.2229 as Bank of America Merrill Lynch warned sterling could reach $1.15 by the first three months of next year when formal Brexit negotiations are expected to begin.

The currency rose on Monday following news that Bank of England governor Mark Carney will remain in his post until 2019, which is a year longer than he was expected to stay on.

The BoE is due to deliver its policy announcement on Thursday while the Federal Reserve reveals its decision on Wednesday. Both central banks are expected to stand pat on interest rates but investors will be searching for any hints on the next course of action in their policy statements.

Earlier, the Bank of Japan and the Reserve Bank of Australia kept their monetary policies unchanged.

On the data front, the UK manufacturing sector deteriorated more than expected in October.

The Markit/CIPS UK manufacturing purchasing managers’ index fell to 54.3 from 55.5 in September, missing expectations for a reading of 54.5. Still, it remained well above its long-run average of 51.5 and higher than the 50 level that separates an expansion from a contraction.

China’s official manufacturing PMI rose to 51.2 in October from 50.4 in September, surprising analysts who had expected a reading of 50.3.

The Caixin China manufacturing PMI also climbed to 51.2 in October from 50.1 a month earlier, beating forecasts for no change.

Chinese service activity expanded further with the official PMI rising to 54.0 last month from 53.7 in September.

In the US, Markit’s final manufacturing PMI came in at 53.4 in October, up from an initial reading 53.2 and 51.5 in September.

The ISM's headline manufacturing index rose to 51.9 from 51.5 in September, beating forecasts for a reading of 51.7.

In contrast, US construction spending declined 0.4% in September on the month to a seasonally-adjusted $1.15bn, according to the latest figures from the Commerce Department. It missed economists’ expectations for a 0.5% increase.

Meanwhile, oil prices edged higher on a weaker dollar, with Brent crude up 0.20% to $48.71 per barrel and West Texas Intermediate up 0.02% to $46.87 per barrel at 1607 GMT.

In company news, Royal Dutch Shell shares jumped after reporting third quarter profits that beat expectations.

Fellow oil giant BP slumped after it said underlying third-quarter profits halved compared to last year, although the fall was not as bad as feared.

Moneysupermarket surged as it said it was on track to meet forecasts for a record year after a resurge in insurance offset a flat period for credit card and loan switching in the third quarter.

Barratt Developments, Taylor Wimpey, Bovis, Rightmove and Crest Nicholson were boosted by a report that China’s second-biggest property developer is in talks to buy privately-owned UK housebuilder Cala in a deal that could be worth as much as £700m.

Asia-focused Standard Chartered was sitting lower after the bank swung to a third-quarter profit, but the numbers missed analysts’ expectations.

BTG was under the cosh after RBC Capital Markets downgraded its rating on the pharmaceuticals company to ‘sector perform’ from ‘outperform’ and cut its target price to 790p from 910p.

Market Movers

FTSE 100 (UKX) 6,917.14 -0.53%
FTSE 250 (MCX) 17,523.30 -0.12%
techMARK (TASX) 3,332.08 -1.03%

FTSE 100 - Risers

Polymetal International (POLY) 938.50p 5.33%
Fresnillo (FRES) 1,718.00p 4.76%
Royal Dutch Shell 'B' (RDSB) 2,199.00p 3.97%
Taylor Wimpey (TW.) 146.80p 3.60%
Royal Dutch Shell 'A' (RDSA) 2,110.50p 3.53%
Barratt Developments (BDEV) 469.10p 3.39%
Dixons Carphone (DC.) 324.00p 2.96%
Travis Perkins (TPK) 1,364.00p 2.33%
Persimmon (PSN) 1,733.00p 2.30%
Randgold Resources Ltd. (RRS) 7,395.00p 2.14%

FTSE 100 - Fallers

Standard Chartered (STAN) 673.30p -5.42%
BP (BP.) 462.05p -4.48%
Shire Plc (SHP) 4,527.50p -2.63%
Smith & Nephew (SN.) 1,156.00p -2.28%
Lloyds Banking Group (LLOY) 56.06p -2.10%
Sage Group (SGE) 707.00p -2.01%
Barclays (BARC) 186.70p -1.89%
Intertek Group (ITRK) 3,356.00p -1.81%
Intu Properties (INTU) 270.60p -1.78%
United Utilities Group (UU.) 923.50p -1.76%

FTSE 250 - Risers

Moneysupermarket.com Group (MONY) 288.90p 10.31%
Hill & Smith Holdings (HILS) 1,057.00p 5.28%
Bovis Homes Group (BVS) 797.00p 5.21%
Supergroup (SGP) 1,400.00p 4.01%
Caledonia Investments (CLDN) 2,417.00p 3.91%
AO World (AO.) 163.70p 3.87%
Vedanta Resources (VED) 741.00p 3.85%
Rightmove (RMV) 3,875.00p 3.75%
Crest Nicholson Holdings (CRST) 420.70p 3.39%
Acacia Mining (ACA) 535.50p 3.28%

FTSE 250 - Fallers

BTG (BTG) 621.50p -5.55%
Savills (SVS) 657.00p -5.33%
Allied Minds (ALM) 330.00p -2.94%
Rotork (ROR) 198.10p -2.89%
Virgin Money Holdings (UK) (VM.) 319.60p -2.86%
Hunting (HTG) 489.50p -2.78%
Aggreko (AGK) 780.00p -2.68%
SEGRO (SGRO) 425.70p -2.63%
Pennon Group (PNN) 813.00p -2.58%
Greencore Group (GNC) 321.80p -2.48%