London stocks drop on corporate earnings, rate decisions

The blue-chip FTSE 100 index was 0.4% lower, after reaching its highest level since early June on Monday, while the mid-cap FTSE 250 index was 0.1% lower

London stocks moved down on Tuesday as investors assessed a mixed bag of corporate earnings and exercised caution around interest rate decisions in the U.S. and UK.

The blue-chip FTSE 100 index was 0.4% lower, after reaching its highest level since early June on Monday. The mid-cap FTSE 250 index was 0.1% lower by 0710 GMT.

The beverages sector was the worst hit, down 6.8% to its lowest level since November 2020. Diageo declined 8.1% to the bottom of the FTSE 100 after the spirits maker reported a sharper than expected 4.8% drop in annual organic operating profit.

Energy shares jumped 0.6%, boosted by a 1.9% rise in top player BP, which reported a second-quarter profit above expectations, raised dividend and extended its share repurchase programme.

Precious metal miners edged up 0.9% as heavyweight Fresnillo added 2.3% after its half-year results.

Investors exercised caution ahead of interest rate decisions in the U.S. and the UK, due later in the week.

The Federal Reserve is expected to keep rates unchanged, while bets of a cut from the Bank of England stand at just more than 58%, despite data showing sticky services inflation.

Also on the radar this week are a key jobs report in the U.S. and quarterly earnings from Big Tech companies such as Microsoft, which is set to report after the closing bell on Tuesday.

In London, Standard Chartered added 5.1% to top the FTSE 100 after the bank announced its largest-ever share buyback worth $1.5 billion and lifted its earnings outlook for this year.

St James's Place added 18% to the top of the FTSE 250 after the wealth manager said it plans to cut tens of millions of pounds of costs, as it tries to rebuild investor confidence following regulatory scrutiny.