The UK market is in negative territory in afternoon trading Wednesday, as debt worries continued to impact investor sentiment with borrowing costs increasing for Germany and Italy at debt auctions.
Germany sold 4.04 billion euros of 10-year bunds, but average yield rose to 1.52 percent from 1.47 percent in the previous sale on May 16.
Italy was successful in raising debt in line with its 6.5 billion euro-target in an auction of 12-month bills, but yield was sharply higher and demand was lower than at a previous auction.
Spanish borrowing costs on Tuesday rose to its highest level since the country adopted euro more than a decade back, as optimism that followed a 100 billion euros EU bailout of its banks continued to fade. Investor sentiment was dampened further by the downgrade of 18 Spanish banks by Fitch Ratings
Meanwhile, the World Bank urged developing nations to prepare for a long period of volatility in the global economy amid a resurgence of tensions in high-income Europe. "Increased uncertainty will add to pre-existing headwinds from budget cutting, banking-sector deleveraging and developing country capacity constraints," the lender said in the newly-released Global Economic Prospects.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.07 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is losing 0.01 percent.
The FTSE 100 index showed some early strength, but turned choppy later on and is currently down 0.09 percent.
Miners are mostly lower. BHP Billiton and Rio Tinto are moderately falling. Xstrata is declining 3.5 percent.
IMI is declining 5.1 percent. Man Group is declining 2.6 percent.
Sainsbury is losing 3.8 percent. The retailer reported higher sales for the first quarter.
Insurer Resolution is advancing 1.8 percent. Drugmaker Shire is gaining 1.7 percent.
Cairn Energy is losing 1.5 percent. The oil & gas giant has agreed to buy North Sea oil producer Nautical Petroleum in a 414 million pounds deal. Nautical shares are surging close to 55 percent.
HSBC raised Tesco to "Overweight" from "Neutral." The stock is falling 0.7 percent.
Elsewhere in Europe, the German DAX is losing 0.44 percent while the French CAC 40 is falling 0.24 percent. Switzerland's SMI is sliding 0.02 percent.
In economic news, Germany's harmonized consumer prices rose more than initially estimated in May, final data from the Federal Statistical Office revealed. EU harmonized inflation came in at 2.2 percent in May, revised up from the prior estimate of 2.1 percent.
Eurozone industrial production declined in April at a slower than expected pace, data from Eurostat showed. Industrial production logged a monthly fall of 0.8 percent in April after easing 0.1 percent in March. The decline was smaller than economists' expectations for a 1.2 percent drop.
Across Asia/Pacific, markets ended mostly higher in choppy trading. China's Shanghai Composite Index climbed 1.3 percent, Hong Kong's Hang Seng gained 0.8 percent and Japan's Nikkei 225 added 0.6 percent. However, Australia's All Ordinaries slid 0.2 percent.
In the U.S., futures point to a lower open on Wall Street. The Commerce Department is set to release its retail sales report at 8:30 am ET. For May, economists estimate a 0.2 percent drop in retail sales and a 0.1 percent dip in retail sales that exclude autos. On the other hand, sales, excluding autos and gasoline, may have risen 0.4 percent.
In the previous session, major averages saw continued strength going into the close, ending the day near their highs for the session. The Dow jumped 1.3 percent, the Nasdaq advanced 1.2 percent and the S&P 500 surged 1.2 percent.
In the commodity space, crude for July delivery is sliding $0.09 to $83.23 per barrel and August gold is losing $1.0 to $1612.8 a troy ounce.
by RTT Staff Writer
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