Reuters: Hot Stocks: FTSE hits 2-mth low on weaker commodity stocks, Tesco slips

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FTSE hits 2-mth low on weaker commodity stocks, Tesco slips Oct 2nd 2013, 08:10 Wed Oct 2, 2013 4:10am EDT * FTSE 100 index sheds 1 percent in morning trade * Tesco top loser after trading update * Mining, energy stocks track weaker oil, metals By Atul Prakash LONDON, Oct 2 (Reuters) - Britain's top share index slipped to a two-month low in early trade on Wednesday, with retailer Tesco falling most after a weak trading update and commodity stocks tracking lower metals and oil prices. Britain's biggest grocer fell more than 4 percent to top the FTSE 100's decliners' list after reporting flat quarterly sales in its home market, as 1 billion pounds ($1.62 billion) of investment failed to help. But commodity shares were the biggest sectoral decliners, with the UK mining index and the energy index down 1.4 percent and 0.9 percent respectively after metals and oil prices fell on concerns about the wider impact of the first partial U.S. government shutdown in 17 years. "As commodity companies have a big exposure in the UK, weaker metals and oil prices are putting some downside pressure on the FTSE 100 index," said Robert Parkes, an equity strategist at HSBC Securities. "There are some lingering tail risks such as the Italian confidence vote (expected) today and U.S. shutdown, but we see these as only short-term risks. Economic fundamentals are improving. We believe that earnings will surprise on the upside in the second half and that will drive the market higher." Investors kept a close eye on the political situation in Italy. Senior party figures in Silvio Berlusconi's fractious centre-right movement urged Italian lawmakers on Tuesday to defy the billionaire media tycoon and back Prime Minister Enrico Letta in a confidence motion on Wednesday. Focus will also be on a meeting of European Central Bank policymakers, who are likely to hold off policy action for now but keep open the options of an interest rate cut or a bumper cash injection should the euro zone outlook sour. Investors are also jittery over the U.S. government shutdown. "It looks like investors are getting increasingly nervous regarding the ongoing impasse in Washington. No sign of any near term budget deal is in sight and the debt ceiling debate is looming too," said Jeremy Batstone-Carr, head of private client research at Charles Stanley. At 0750 GMT, the blue-chip FTSE 100 index was 61.38 points, or 1 percent, lower at 6,398.63 points after falling to a two-month low of 6,386.18. However, the index is still up nearly 10 percent so far this year. On the data front, investors await UK construction PMI data, due at 0830 GMT, for September, which is forecast to edge higher to 59.2 from 59.1. In the United States, ADP's September employment data, at 1215 GMT, are likely to have risen to 180,000 from 176,000 in the previous month. (Reporting by Atul Prakash, editing by Gareth Jones) Link this Share this Digg this Email Reprints

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