London open: Stocks decline after FOMC hints at December rate hike

UK stocks declined on Thursday after the Federal Reserve hinted at the possibility of a December interest rate hike.

The Fed decided to keep interest rates unchanged on Wednesday at 0.25%, as expected by analysts, but left the door open to an increase in December.

The US central bank downplayed global economic headwinds in its statement on the decision, which was made after a two-day policy meeting, saying that it was monitoring developments abroad.

"We see this statement as a clear attempt by the FOMC to keep December on the table," analysts at Barclays said.

"In some sense, any softer of a statement would likely have pushed December out of consideration as the Fed would likely be hesitant to raise rates with very low market-implied probabilities of policy action."

Investors are now turning their attention to the release of US gross domestic product data at 1230 GMT which is expected to show a slowdown to an annualised 1.6% in the third quarter from 3.9% the previous quarter.

US personal consumption expenditure will also be released at the same time with analysts predicting a 1.4% quarter-on-quarter increase in the third quarter.

Pending US home sales will come at 1400 GMT. Economists predict a 7.4% rise in September after a 6.7% gain the previous month.

On this side of the pond, Nationwide revealed UK house prices rose 3.9% in the year to October, compared to expectations for a 3.8% gain in line with the previous month. Compared to a month ago, prices rose 0.6% in October, more than the 0.5% estimated.

At 0930 GMT net consumer credit and mortgage approvals reports are due in the UK.

German unemployment fell 5,000 in October, more than the 4,000 that was forecast following a revised 1,000 increase in September, Destatis revealed. The unemployment rate remained at 6.4%, as expected.

German inflation figures at 1300 GMT are expected to show an improvement in October, with analysts seeing a 0.1% month-on-month dip compared to the prior month’s 0.2% fall. Year-on-year the consumer price index may have risen 0.2% in October following after zero growth in September, analysts estimate.

On the company front, Smith & Nephew was a top faller after posting a drop in third quarter reported revenue on currency headwinds and announcing the acquisition of robotics company Blue Belt Technologies.

Aviva jumped after Panmure Gordon reiterated its ‘buy’ rating on the insurer and the company reported a 25% increase in new business.

Barclays slumped after reporting a drop in third-quarter pre-tax profit as the cost of claims settlements weighed on results and revenues fell.

BT Group dipped after reporting a drop in operating profit in the second quarter due to the telecoms company's diversification into media and investing in sports broadcasting.

Playtech rallied after the gambling, software and services supplier reported strong trading in both of its divisions in the three months to September.

Market Movers

FTSE 100 (UKX) 6,385.61 -0.81%
FTSE 250 (MCX) 17,098.82 -0.26%
techMARK (TASX) 3,081.83 -0.85%

FTSE 100 - Risers

Aviva (AV.) 484.50p 1.06%
Merlin Entertainments (MERL) 404.60p 1.05%
Hikma Pharmaceuticals (HIK) 2,127.00p 0.95%
Carnival (CCL) 3,631.00p 0.86%
InterContinental Hotels Group (IHG) 2,572.00p 0.74%
Associated British Foods (ABF) 3,495.00p 0.72%
St James's Place (STJ) 965.00p 0.68%
TUI AG Reg Shs (DI) (TUI) 1,211.00p 0.67%
Reckitt Benckiser Group (RB.) 6,388.00p 0.60%
Diageo (DGE) 1,880.00p 0.56%

FTSE 100 - Fallers

Smith & Nephew (SN.) 1,081.00p -6.00%
BHP Billiton (BLT) 1,045.00p -4.74%
Anglo American (AAL) 536.40p -4.72%
Randgold Resources Ltd. (RRS) 4,478.00p -4.44%
Meggitt (MGGT) 351.60p -4.20%
Fresnillo (FRES) 737.50p -3.97%
Barclays (BARC) 243.30p -3.89%
Antofagasta (ANTO) 516.50p -3.73%
Rio Tinto (RIO) 2,335.00p -3.31%
Glencore (GLEN) 111.95p -3.03%

FTSE 250 - Risers

Playtech (PTEC) 820.00p 3.47%
AO World (AO.) 164.30p 2.69%
Henderson Group (HGG) 286.50p 1.63%
Just Retirement Group (JRG) 170.60p 1.55%
Jimmy Choo (CHOO) 144.00p 1.41%
Booker Group (BOK) 187.40p 1.30%
P2P Global Investments C (P2P2) 982.00p 1.24%
Ocado Group (OCDO) 364.30p 1.22%
Euromoney Institutional Investor (ERM) 955.50p 1.11%
Worldwide Healthcare Trust (WWH) 1,819.00p 1.06%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 113.20p -5.35%
Millennium & Copthorne Hotels (MLC) 487.70p -5.30%
Premier Oil (PMO) 69.20p -5.08%
Pace (PIC) 366.70p -4.31%
Vedanta Resources (VED) 479.50p -4.04%
Nostrum Oil & Gas (NOG) 436.70p -3.79%
Evraz (EVR) 80.40p -3.71%
Centamin (DI) (CEY) 66.90p -2.90%
Acacia Mining (ACA) 200.00p -2.77%
Polymetal International (POLY) 571.00p -2.73%