Disappointing retail sales in the UK combined with a bleak economic outlook in the Eurozone have contributed to a decline in the price of shares for many of the leading companies on the FTSE.
The exchange fell by 18.3 points to 7010.11, following an unexpected drop in retail sales in March and a slump in German growth. The German DAX is down more than 1 per cent. Poor figures in French stocks are also adding to the pressure.
Uncertainty in Greece continues to cause instability in markets as the country runs out of time to resolve its economic crisis. The upcoming election in the UK is yet another source of uncertainty for some traders.
Positive movers included United Utilities, up 12.5p, Citigroup up 50p to 950p and Severn Trent up 17p. Tesco made a recovery of 2.4p, after their record breaking loss of £6.4bn. William Hill fell 3.6 per cent, after reporting a 19 per cent drop in first quarter profits.
UK retail sales were down 0.5% in March from February. Figures show that consumers are still cautious about spending.
Keith Richardson, managing director for retail at Lloyds Bank Commercial Banking said “Even with continued falls in fuel and food prices, consumers are responding to this current period of uncertainty by being just as careful about their own spending as they have been for the past few years.
“Despite the fact that Mother’s Day fell in March and Easter fell early in April, this wasn’t enough to bring forward any boost in spending into March, doing nothing to allay fears that while consumers may have a little more money in their pockets, they are spending it on leisure treats like eating out and going on holiday, rather than on High Street goods,” he said.
Alan Clarke, at Scotiabank, said: “The monthly data all point towards sluggish Q1 GDP next Tuesday, not the sort of reading that the coalition government will be hoping for.”
But Howard Archer, chief UK and European economist at IHS Global Insight, said that although the retail data was “disappointing”, wage growth and low inflation should bolster consumer spending over the coming months.
“Despite March’s weaker-than-expected performance, the prospects for retail sales and consumer spending look bright, as purchasing power has strengthened and should continue to do so,” Mr Archer said.