Sector movers: Defensives find bid as Turkish lira bounces, analysts wary

Sectors with exposure to Emerging Markets - such as Beverages and Personal Goods - were taking turns with Tobacco and Non-life insurance at the top of the leaderboard, aided by a bounce in the Turkish Lira, which was helping to steady investors' frayed nerves.

Perhaps as one might expect, several London-listed firms were among the European corporates with the most exposure to Turkey.

According to Deutsche Bank, they included: Diageo (3-4% of sales), British American Tobacco (2% sales), Unilever (2-3% sales) and Vodafone (4% of group EBITDA).

As of 1552 BST, the US dollar was retreating by 5.52% to 6.5036 against the Turkish lira, but chiefly because Turkish authorities were micro-managing liquidity conditions in Turkish debt markets.

Time was not on the side of Turkish officials, analysts at Oxford Economics said.

"The authorities need to act decisively, but, history suggests that they will instead procrastinate, meaning pressure on the TRY will persist. Turkey is on the verge of getting caught in a self-inflicted vicious circle that leads to a full-blown balance of payments crisis," they told clients in a research note.

"Markets are also concerns what seems to be the increasing use of sanctions as an extension of US foreign policy," Oxford analyst Nafez Zouk added.

On the other side of the ledger, and likely reflecting not only the simmering tensions around Turkey but also the slowdown in Chinese growth, in part due to the ongoing trade spat between China and the US, life insurers were mostly lower.

Thus, data released overnight on Chinese industrial production, fixed asset investment and retail sales all printed below economists' forecasts.

Readings on that data prompted Julian Evans-Pritchard at Capital Economics to tell clients: "Admittedly, infrastructure spending may soon bottom out given the recent shift toward a looser fiscal stance and monetary easing should eventually drive a turnaround in credit growth.

"However, these are unlikely to put a floor beneath economic growth until the middle of next year."

US tariffs and cooling growth around the world also meant exports were unlikely to act as an offset.

Top performing sectors so far today

Beverages 22,476.91 +0.54%

Gas, Water & Multiutilities 4,950.12 +0.53%

Personal Goods 38,981.76 +0.44%

Tobacco 46,507.72 +0.43%

Health Care Equipment & Services 7,759.39 +0.40%

Bottom performing sectors so far today

Life Insurance 8,329.93 -1.52%

Mobile Telecommunications 4,004.02 -1.12%

Industrial Metals & Mining 4,628.36 -1.06%

Forestry & Paper 23,910.93 -0.89%

General Industrials 6,880.69 -0.89%