FTSE 100 falls as temporary U.S. debt fix underwhelms

Thu Oct 17, 2013 3:52am EDT

* FTSE 100 down 7.57 points at 6,564.02
    * US politicians provide temporary fix to debt problems
    * SAB Miller rallies after reporting 4pct rise in revs
    * BSkyB gains as it brushes aside BT challenge

    By David Brett
    LONDON, Oct 17 (Reuters) - Britain's top share index opened
lower on Thursday as investors cashed in gains, with the
temporary nature of the debt deal in Washington meaning
uncertainty over future U.S. fiscal policy continued to underpin
market sentiment.
    The overnight deal means the U.S. government will be funded
until Jan. 15 and the debt ceiling raised until Feb. 7, leaving
markets to address the risk of another bitter budget fight and
shutdown early next year. 
    "The constant contentiousness of U.S. budget politics
increases policy uncertainty and does damage to the fragile
economic recovery. The willingness to play with fire does not
bode well for future negotiations," Citi analysts said in a
note.
    By 0730 GMT, the FTSE 100 was down 7.57 points, or
0.1 percent at 6,564.02, led by cyclical sectors such as banks
, energy firms and miners.
    "The market's muted reaction to the news can be interpreted
as a general feeling that rather than solving the underlying
problem, the US government has merely extended the time it has
to tackle the issue," Adam Seagrave, trader at Saxo Bank, said.
    "You could also make the case that equity markets never
truly believed the U.S. policymakers would allow a default and
that some of last night's news was already factored in to the
price of equities; the FTSE100 index has risen more than 200
points since this time last week," he said.
    With the debt issue temporarily out of the way, investors
could focus on a raft of earnings announcement out on Thursday.
    SABMiller, the world's second-largest beer maker,
climbed 4.5 percent after it said net revenue rose 4 percent in
the first half of its financial year, driven by growth in Latin
America and Africa. 
    Drinks company Diageo Plc managed only modest gains
after it reported a 3 percent rise in quarterly sales, with
Shore Capital describing the update as subdued and possibly
leading to downgrades to market expectations. 
    Britain's dominant pay-TV provider BSkyB rose 4.5
percent as it brushed off the impact of rival BT's new
sports service in the first quarter, drawing solid demand for
its TV and broadband. 

 (Reporting by David Brett)
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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