(Alliance News) - Stocks in London are called lower on Tuesday, as uncertainty over developments in the Middle East weighs on sentiment.

"We know that no matter how bad the situation gets in the Middle East, the way, and the intensity with which the market perceives the news will gradually decrease, and risk assets like gold and Swiss franc will eventually give back gains. But, right now, it is still too early to lower one’s guard, as Israel hasn’t said its last word yet," said Swissquote Bank's Ipek Ozkardeskaya.

In UK economy news, wage inflation data came in cooler than expected, as growth in pay outstrips inflation for the first time in nearly two years.

In UK company news, Rolls-Royce confirmed it would axe thousands of jobs as a cost-cutting measure. Rio Tinto said it expected annual iron ore production to edge higher year-on-year. Bellway said it expects completions in financial 2024 to fall as the macro-economic climate weighs on demand in the housing sector.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called down 10.8 points, 0.1%, at 7,619.83

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Hang Seng: up 0.6% at 17,745.20

Nikkei 225: closed up 1.2% at 32,040.29

S&P/ASX 200: closed up 0.4% at 7,056.10

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DJIA: closed up 314.25 points, or 0.9%, at 33,984.54

S&P 500: closed up 45.85 points, or 1.1%, at 4,373.63

Nasdaq Composite: closed up 160.75 points, or 1.2%, at 13,567.98

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EUR: down at USD1.0538 (USD1.0546)

GBP: down at USD1.2180 (USD1.2194)

USD: up at JPY149.62 (JPY149.56)

Gold: down at USD1,916.74 per ounce (USD1,921.22)

Oil (Brent): down at USD89.52 a barrel (USD90.19)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

11:00 CEST Germany ZEW indicator of economic sentiment

09:30 BST UK card spending statistics

08:30 EDT US retail sales

08:55 EDT US Johnson Redbook retail sales index

09:15 EDT US industrial production

10:00 EDT US manufacturing and trade sales

10:00 EDT US NAHB housing market index

10:45 EDT US Fed Richmond President Thomas Barkin speaks

16:00 EDT US treasury international capital data

16:30 EDT US API weekly statistical bulletin

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UK wage inflation data came in cooler than market expectations, figures from the Office for National Statistics showed. In the three months to August, annual growth in average total pay, excluding bonuses, was 7.8%. This was in line with market consensus, as cited by FXStreet. The figure for the previous three-month period was revised upwards to 7.9% from 7.8%. Including bonuses, average pay growth cooled to 8.1%, which undershot market expectations of 8.3%. It was 8.5% in the three months to July.

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The UK economy is in a "horrible fiscal bind" as it heads for recession and with no room to cut taxes or increase public spending amid mounting political pressure on the chancellor to do so, according to a report. The Institute for Fiscal Studies warned in its latest Green Budget that Britain will slump into a "moderate" recession in the first half of 2024 as borrowing costs stay elevated. The report, funded by the Nuffield Foundation and using economic forecasting by Citi, analysed the challenges facing the chancellor ahead of his autumn statement. The IFS said there was little room for tax cuts "any time soon", based on the state of the nation's public finances.

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A decision on how much Heathrow Airport can charge airlines must be reconsidered, competition regulator the Competition & Markets Authority said. In February, aviation regulator the Civil Aviation Authority said the cap on Heathrow's average charge per passenger must be reduced from GBP31.57 for 2023 and last year, to GBP25.43 over the next three years. But the airport and three airlines – British Airways, Delta Air Lines and Virgin Atlantic – appealed against the CAA's decision. Kirstin Baker, who chairs the CMA's group which assessed the appeals, said: "Having considered these appeals, we found that the CAA's Heathrow price control struck broadly the right balance between ensuring prices for passengers are not too high and encouraging investors to maintain and improve the airport over time."

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BROKER RATING CHANGES

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RBC raises XPS Pensions Group price target to 245 (220) pence - 'outperform'

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Barclays raises Restaurant Group price target to 65 (50) pence - 'underweight'

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COMPANIES - FTSE 100

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Rolls-Royce is set to axe between 2,000-2,500 jobs as part of a cost-cutting plan, driven by its new chief executive. The company confirmed a report from Sky News, which on Monday said the aircraft engine manufacturer based in Derby is expected to announce plans to lay off around 2,500 staff as soon as Tuesday. Rolls Royce explained: "The new structure will create a more agile business that is better able to serve customers and continue to create and maintain world-class products. It will help Rolls-Royce build enhanced capabilities in key areas such as procurement and supply chain management, ensuring they are as strong as the company's engineering and technical excellence." The cuts aim to eliminate duplication and cut costs. It said it employs 42,000 people worldwide. Sky had reported that the cuts will be distributed across its global operations and are likely to affect hundreds of UK staff, citing people close to the situation. Tufan Erginbilgic, who took over as Rolls-Royce's chief executive at the start of the year, said the firm is "building a Rolls-Royce that is fit for the future".

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Rio Tinto reported little change in iron ore production and sales in the third quarter, as it expected iron ore production for 2023 to be slightly higher than in 2022. The London-based mining company said Pilbara iron ore shipments were 83.9 million tonnes, 1.2% up from 82.9 million tonnes a year ago. Pilbara iron ore production was 0.9% lower at 83.5 million tonnes compared to 84.3 million tonnes. Aluminium production meanwhile rose 9.1% to 828,000 tonnes from 759,000 tonnes a year ago. Titanium dioxide slag output fell 20% to 247,000 tonnes from 318,000 tonnes in the third quarter of 2022, when it had jumped 48% year-on-year. The company said it continued to expect full year iron ore shipments for the Pilbara operations to be in the upper half of the original 320 to 335 million tonne range, compared to 322 million tonnes in 2022.

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COMPANIES - FTSE 250

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Bellway hailed a "resilient" performance in a challenging market in the financial year ended July 31. The housebuilder said revenue fell 3.7% year-on-year to GBP3.41 billion from GBP3.54 billion, but pretax profit climbed to 59% to GBP483.0 million from GBP304.2 million. This was thanks in large part to just GBP49.6 million in net legacy building safety expenses during the year, compared to the GBP346.2 million the year before. On an underlying basis, profit shrank 18% to GBP532.6 million from GBP650.4 million. It recommends keeping the final dividend at 95.0 pence, which will leave the annual total unchanged at 140.0p. It expects a "material reduction" in volume output in financial 2024, with just 7,500 or so completions targeted, compared to 10,945 in the most recent year. This is due to its reduced order book and lower reservation rates. "The board notes however, that a wider than usual range of outcomes are possible, and the final volume outturn will depend on the trajectory of mortgage interest rates and the strength of demand in the autumn and spring selling seasons," Bellway said.

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OTHER COMPANIES

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Zinc Media announced its largest-ever US television series contract. The television, brand and audio production said the contract is for a series with a working title of "Top Gun: The Next Generation", and will bring around USD9 million in revenue. Zinc explained: "Top Gun: The Next Generation, is a series which follows the world-class US Navy pilots as they work to join the next generation of the Navy's most elite strike fighter force. With unprecedented access to one of the US Navy's most demanding training and selection programmes, the series follows a group of officers as they push their limits on the grueling Advanced Flight Training Programme." The series will be filled towards the end of 2023 and into 2024, with final delivery due in 2025.

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By Elizabeth Winter, Alliance News senior markets reporter

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