UK’s Benchmark Index Drops as Iraqi Violence Persists

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UK’s Benchmark Index Drops as Iraqi Violence Persists

UK’s blue-chip index fell on Tuesday, dragged by mining shares, as investors acted cautiously following signs of slow economic growth and escalating violence in Iraq.

The benchmark FTSE 100 index was down 0.2% at 6,787.07 points.

The UK gauge for mining companies slid 0.8%, plunging the most among all sectors on fears regarding economic growth in the region as Germany’s Ifo gauge of consumer business confidence dropped to the lowest point this year.

Investors remained cautious on tension in Iraq even as John Kerry held crisis talks with leadership of Iraq’s autonomous Kurdish region.

“Geopolitical concerns and Britain’s monetary policy outlook are making people nervous, but I think the market wants to go higher and we are witnessing a short-term pullback,” analyst Chris Beauchamp of IG told Reuters.

Remarks by officials from Bank of England also made investors to trade cautiously as the market lacked solid catalysts to beat the current trading bracket.

The central bank’s Governor Mark Carney suggested before lawmakers that the bank might not hike interests rates before the end of this year, saying UK’s there was still plenty of room for the UK economy to improve.

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However, BoE Deputy Governor Charlie Bean that UK was with time approaching a more stringent monetary policy, although the eventual adjustment would be tied to the pace of economic progress.

According to Bloomberg, Aviva slid 1.1% to 504.5 pence, the lowest exchange rare since April. UBS downgraded its rating on the stock to neutral from buy, saying management of the London-based firm needed to check costs as slowed reserve improvement in the life insurance venture hurt profitability.

Shire added 2.4% to 4,405 pence. Based in Dublin, the firm engaged Goldman after rejecting a $46 billion overture AbbVie in Chicago, as per reports by the New York Times.

BP Plc advanced 0.8% to 523.9 pence.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com