By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Not even hints of a rate hike from Bank
of England Governor Mark Carney could distract investors from
worries about the outcome of next week's referendum on Scottish
independence as the FTSE 100 remained stuck in the red Tuesday for
a third straight day.
The London benchmark fell 0.1% to close at 6,829.00, erasing a
small gain seen at the open.
Scotland referendum: Traders are still nervous ahead of the vote
on Scottish independence on Sept. 18. A poll that was released over
the weekend put the pro-independence camp in the lead for the first
time. However, other surveys still point to majority for the "no"
campaign.
Economists at Credit Suisse in a note on Tuesday sketched out
some of the risks of Scottish independence, saying Scotland would
fall into a deep recession. They also noted that the pound would
weaken and could fall to as low as $1.50. Read: Pound's selloff on
Scottish uncertainty isn't over
The pound(GBPUSD) got creamed in Monday's trade, and continued
to drift south on Tuesday. Sterling bought $1.6093, compared with
$1.6110 late Monday in New York. Comments from BOE's Carney briefly
gave sterling a lift after he said the central bank will likely
meet its inflation and jobs goals if it starts to raise its
benchmark interest rate early next year.
Data: The Office for National Statistics said industrial
production climbed 0.5% in July, beating market expectations of a
0.3% rise.
Rob Wood, chief U.K. economist at Berenberg, called the numbers
"solid", but cautioned that growth in industrial production should
start to slow over the next couple of months when the "effect of
fighting in Ukraine on core-eurozone business confidence feeds
through to the U.K."
Movers: Wm Morrison Supermarkets PLC climbed 3.1% after
Citigroup upgraded the supermarkets chain to buy, according to Dow
Jones Newswires. Other retailers rose in step, with Marks &
Spencer Group PLC up 1.3% and J Sainsbury PLC gaining 0.6%.
Shares of Lloyds Banking Group PLC (LYG) put on 1.5% and
Barclays PLC (BCS) rose 0.4% as HSBC lifted the two banks to
overweight from neutral. HSBC said that the expected hike in U.K.
interest rates would -- contrary to what it described as the
conventional wisdom -- let them make more money from their retail
operations.
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