Fiscal cliff puts pressure on world markets

Fiscal cliff puts pressure on world markets

World markets came under pressure today as ongoing uncertainty over the approaching fiscal cliff in the US overshadowed upbeat manufacturing figures from Asian powerhouse China.

Wall Street’s S&P 500 was down 0.3% with Apple’s shares falling more than 3% after a federal jury found that the iPad creator infringed on three patents related to mobile-devices belonging to a company part-owned by Nokia and Sony.

The Dow Jones Industrial Average was also lower, while the FTSE 100 Index lost 7 points to stand around 5922 as talks aimed at avoiding the US fiscal cliff of steep tax hikes and budget cuts continued in Washington.

US consumer prices fell more than expected in November as petrol prices tumbled, but this failed to cheer investors.

Encouraging manufacturing data in China had lifted Asian markets as the figure of 50.9 for activity during December was the best result since October 2011, raising hopes that growth in the world’s second biggest economy will start to accelerate.

But the ongoing budget battle between Democrats and Republicans soon put an end to any optimism.

Analysts believe that until the issue is resolved one way or another it will be hard for the FTSE 100 Index to make further headway from its recent eight-month high.

Among London’s risers, China-focused luxury goods group Burberry lifted 2p to 1264p after Morgan Stanley maintained its 1300p a share target for the blue-chip stock but said investment costs were likely to limit medium term earnings prospects.

Infrastructure stocks were also doing well with United Utilities up 3.5p to 704.5p, South West Water owner Pennon up 4.14p to 624.6p and power generation firm SSE ahead 11p to 1444p, a rise of nearly 1%.

There were falls across the insurance sector as Prudential declined 21p to 877.5p and rival Aviva slipped 2.5p to 370.3p.

There was a similar improvement from Laura Ashley as the fashion and home furnishings chain said like-for-like sales improved by 4.9% in the 19 weeks to December 8. Website revenues were up 22.6% as the company’s shares lifted 0.25p to 27.5p.

Meanwhile, shares in Punch Taverns was flat at 7.5p after the pub estate owner said it was trading in line with expectations, with profit per pub stable in the 16 weeks to December 8.

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