Published: Fri, August 11, 2017
Economy | By Annette Adams

FTSE sell-off gathers strength on North Korea fears

FTSE sell-off gathers strength on North Korea fears

Stocks in France and Germany were down more than 1 percent in early trading, while the FTSE 100 share index in London fell 0.8 percent.

Homebuilders dropped after a survey showed United Kingdom house prices in July rose at the slowest rate since early 2013 due to political uncertainty and the impact of tax changes. The Russell 2000 index of smaller-company stocks gave up 19 points, or 1.4 percent, to 1,377.

American and South Korean officials said they would move forward with large-scale military exercises later this month, which North Korea claims are a rehearsal for war.

"Risk aversion is once again the name of the geopolitical tensions mount and investors head for cover in the traditional safe havens", said Oanda analyst Craig Erlam.

One of the few pieces of news in the markets right now is the US CPI data, which may show that inflation in the country has fallen, reducing the need for any forthcoming Federal Reserve interest rate hikes.

Old Mutual declared a first interim dividend per share of 3.53 pence, but noted it is taking a "conservative approach" towards setting its full-year dividend due to the need for capital management as it pursues a demerger of its various operations.

Card Factory investors were celebrating as the retailer reported a 3.1% increase in first half like-for-like sales after opening 30 new stores during the period.

On the currency markets, the pound fell 0.2% against the dollar to $1.2976 and slipped 0.05% against the euro at 1.1055 euros.

The healthcare sector declined just 0.3 percent thanks to strong gains from the world's top maker of diabetes drugs, Novo Nordisk (NOVOb.CO), up 7.9 percent after beating second-quarter profit forecasts. Barratt Developments fell 2.88 percent, Taylor Wimpey lost 2.98 percent and Persimmon shed 2.92 percent. The trend appeared to overshadow strong quarterly revenue growth in the quarter.

In oil, the price of Brent crude sunk by 0.5% to 51.65 USA dollars a barrel amid concerns about over supply in the market.

BT down was more than 4%, or 14.4p to 298.9p, while Lloyds fell 2.1p to 64.83p.

The dollar was at an eight-week low against the Japanese yen during Asian trading.

European markets followed suit with the DAX down 1.15% to 12,014.30 and the CAC 40 off 0.59% to 5,115.23.

Manufacturing production in June was flat, as predicted, after falling 0.1% in May, while United Kingdom construction output badly missed forecasts fell 0.1% month on month and rose 0.9% year-on-year.

The US Consumer Price Index (CPI) edged up 0.1% last month after staying flat in June and falling by 0.1% in May.

The FTSE 100 firm announced in March a year ago that it would run its US-based asset management operation, its UK-based wealth unit, an emerging markets division and Nedbank in South Africa as separate businesses.

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