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The Mid Session Wrap is a report on the biggest movers in the FTSE 100 and macroeconomic news that impacts movements in share prices. The report also previews macroeconomic data that is due to be released over the course of the session.
UPDATE: FTSE 100 falls, US stocks seen higher ahead of Bernanke testimonyJuly 17 2012, 1:59pm
UK stocks fell today after the ZEW institute reported that business confidence in Germany fell for the third month in a row. ZEW said its gauge declined to minus-19.6 this month, which was the lowest reading since January, from minus-16.9 in June.
The UK's blue chip FTSE 100 index stood at 5,645 at midday, down 16 points (0.3 percent) from Monday’s close.
Here in the UK, the Office for National Statistics said growth in consumer prices slowed to 2.4 percent in June from 2.8 percent in May, giving the Bank of England more room for stimulus action.
Earlier this month, the BoE decided to extend its quantitative easing programme by £50 billion to £375 billion to shore up the economy.
Traders are now turning attention to the US, where chairman of the Federal Reserve Ben Bernanke will begin his two-day testimony to the US Congress. This will be Bernanke’s first speech since the latest non-farm payrolls report, which revealed that the US economy created only 80,000 jobs last month.
“As with previous months, investors will be waiting cautiously for any hints or signs of a loosening of monetary policy and therefore further quantitative easing to boost the US Economy,” said market analyst at City Index Fiona Cincotta.
“Even if nothing particular is mentioned in this session it is likely to occur between now and the end of the year and with this in mind the markets are waiting for the green light.”
G4S (LON:GFS, down 4.2pct at 243.8p) was the heaviest faller in the top flight as chief executive Nick Buckles was grilled by MPs over the security services group’s failure to supply enough staff for the upcoming Olympics in London.
Builders’ merchant Wolseley (LON:WOS, down 2.9pct at 2,260p) also was in decline after reporting that it is considering selling its French business.
Other notable fallers included National Grid (LON:NG., down 3.2pct at 660.5p), which yesterday criticised regulator Ofgem’s £22 billion plan to upgrade power networks, and British Airways owner IAG (LON:IAG, down 2.4pct at 156.1p).
Meanwhile, Barclays (LON:BARC, up 1.6pct at 160.15p) was the top performer in the FTSE 100, followed by oil and gas engineering firm Amec (LON:AMEC, up 1.4pct at 1,080p) and advertiser WPP (LON:WPP, up 1.1pct at 794.5p).
Financial bookmakers are projecting a higher open on Wall Street.
Futures for the Dow Jones Industrial Average (DJIA) rose 37 points (0.3 percent) in pre-market and futures for the broader S&P 500 index rose 4.5 points (0.35 percent).
Elsewhere on the economic front, investors also saw a report Tuesday from the Labour Department that said U.S. consumer prices were unchanged in June as higher food costs offset another decline in energy.
This report will be followed by industrial production at 9:15am ET, and the home builders' index for July at 10am ET.
n corporate news, Yahoo (NASDAQ:YHOO) shares rose almost 2 percent before the bell after news came out late yesterday that the internet portal appointed Google's Marissa Mayer as its new chief executive. Mayer was one of the first employees at Google, and has been instrumental in the success of the company's search business.
Second quarter corporate earnings season continued with a number of companies coming out with results today.
Among them, Goldman Sachs (NYSE:GS) reported profit and revenue dropped from a year ago, but again, the results still topped analyst forecasts. Shares were up in pre-market trade.
UK corporate news
In other news in the FTSE 100, Rio Tinto (LON:RIO, down 2pct at 2,928p) reported record first half iron ore production, but said that global economic conditions “dropped markedly” in the second quarter.
The group reported total iron ore production of 62 million tonnes (Mt) for the second quarter, taking the first half total to 120 Mt, up four percent from a year earlier. Shipments also increased four percent to 115 Mt.
Attributable production for the second quarter and the first half was 49 Mt and 94 Mt respectively.
During the quarter, Rio Tinto announced further investments to advance the expansion of its Pilbara iron ore business to 353 million tonnes per annum and to progress the Simandou iron ore project in Guinea.
The mining group expects to produce 250 Mt from its global operations this year.
Fellow blue chip Burberry (LON:BRBY, down 0.5pct at 1,202p) has decided to end its licence agreement with Interparfums SA, currently the exclusive worldwide licensee for its fragrance and beauty products.
The fashion house said the termination of the agreement, which will take effect at the end of the year, will help it “maintain flexibility in pursuing its objective to develop fully this business in the future”.
Burberry said the two companies have been in talks regarding the potential establishment of a new operating model for the Burberry fragrance and beauty business. While these discussions continue, the outcome is uncertain, the group added.
In the FTSE 250, chipmaker CSR (LON:CSR, up 31pct at 285.8p) announced it is selling its development operations in handset connectivity and location to Samsung Electronics to focus on five high growth markets.
Samsung is paying US$310 million in cash for the business and for an additional US$34.4 million, will take an equity stake of 4.9 percent of CSR on completion of the transfer, buying the shares at 223 pence which is the level they closed at yesterday.
The chipmaker plans to return US$285 million to shareholders after completion, currently expected to occur during the fourth quarter this year.
The deal will give Samsung a worldwide, perpetual, royalty-free, non-exclusive licence of the company's intellectual property rights used in its handset connectivity and location products.
Samsung will also gain 21 US patents, including their respective international counterparts, which will be licensed back to CSR on a royalty-free basis.
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