The pound was finding support but UK share prices were narrowly mixed, ahead of a highly anticipated, but also well-trailed, autumn statement, due at midday on Thursday.
'Today, the much-expected budget announcement will finally hit the fan. And it won't be pretty. The UK braces for 'austerity on steroids' wrote Bloomberg, reminding that [UK Prime Minister Rishi] Sunak's government must fill in a £55 billion hole by increasing taxes and cutting spending. For investors, though, austerity means a more stable budget, less negative pressure on the sovereign bonds, and an ideally stronger British pound,' said Ipek Ozkardeskaya at Swissquote.
The pound rose to $1.1950 on Thursday morning in London, up from $1.1883 late Wednesday.
The FTSE 100 index opened down 7.54 points, 0.1%, at 7,343.65. The mid-cap FTSE 250 was up 21.01 points, or 0.1%, at 19,133.41, but the AIM All-Share was down 1.25 points, or 0.2%, at 838.63.
The Cboe UK 100 was down 0.2% at 733.93. The Cboe UK 250 was up 0.1% at 16,482.14. The Cboe Small Companies was down 0.2% at 12,888.52.
In the FTSE 100, Burberry was up 0.1% after the luxury clothing and accessories retailer reported a strong rise in interim profit and revenue, but maintained its near-term guidance amid a 'challenging' economic environment.
For the six months that ended October 1, Burberry posted a pretax profit of £251 million, up 31% from £191 million in the six months to September 25 last year. Revenue rose by 12% to £1.35 billion from £1.21 billion.
However, given the potential impact of continued Covid-19-related disruption in China, as well as recessionary risk in Europe and the Americas, Burberry said it has decided to maintain its near-term guidance through to financial 2024.
Russell Pointon at research house Edison said Burberry's revenue increase beat expectation, despite the continued Covid-related lockdowns in China, a key market.
'Historical trends demonstrate that luxury brands are less likely to suffer from low consumer confidence, and the premium brand looks set to weather some of the most pressing cost-of-living challenges as its customer base will retain most of its spending power,' Pointon said of Burberry.
Hargreaves Lansdown fell 1.8% after RBC cut the financial services firm to 'sector perform' from 'outperform', with a price target of 1,050 pence.
Flutter Entertainment was up 1.6%. At an investor day on Wednesday, the Paddy Power-owner had talked up the strength of its US business, as FanDuel continues to gain traction.
It said FanDuel is the 'number one' sports betting operator in the US, with a 42% share of the online market.
'We are confident in a path to a 2030 total addressable market of more than $40 billion in gross gaming revenue which represents growth of 4.5 times the size of the market today,' the gambling firm said.
In the FTSE 250, International Distribution Services fell 1.7%, as the company formerly known as Royal Mail swung to an interim loss.
IDS swung to a £127 million pretax loss in the six months that ended September 25 from a profit of £315 million a year before, as revenue slipped by 3.9% to £5.84 billion from £6.07 billion.
Revenue at Royal Mail, its UK arm, was down 10.5%, while it was up 9.5% in sterling terms at international business GLS.
'In the event that significant change within Royal Mail is not achieved,' IDS said, 'all options remain open to protect the value and prospects of the group, including separation of the two companies.'
IDS declared no interim dividend but said it may pay a final dividend from the earnings of GLS.
Grainger rose 1.0%. The residential landlord reported a 'very successful year' in which it delivered record net rental income growth and record occupancy.
In the year that ended September 30, Grainger said pretax profit nearly doubled to £298.6 million from £152.1 million.
It said the profit figure included a £81.2 million valuation uplift from one-off transfers from a trading property to an investment property in the year.
Net rental income jumped 22% year-on-year to £86.3 million from £70.6 million. In the year, rent collection averaged at 98% and occupancy held above 90%.
Elsewhere in London, Keller rose 1.8%. The engineering firm said trading since its half-year results has continued at record levels, despite a challenging macro environment.
As a result, Keller remains on track to deliver a full-year performance in-line with expectations, aided by a FX tailwind.
Stocks on the European continent were higher. The CAC 40 index in Paris was up 0.3%, and the DAX 40 in Frankfurt was 0.8% higher. The euro traded at $1.0403, flat against $1.0405.
In Asia, stocks ended in the red. The Shanghai Composite ended down 0.2% and the Hang Seng in Hong Kong closed 1.2% lower. In Tokyo, the Nikkei 225 closed down 0.4%. The S&P/ASX 200 in Sydney closed up 0.2%.
In the US on Wednesday, Wall Street also had ended lower, with the Dow Jones Industrial Average down 0.1%, the S&P 500 down 0.8% and the Nasdaq Composite down 1.5%
US markets came under pressure after a disappointing quarterly update from Target hit the retail sector and knocked the wider market lower.
Target shares slid 13% in New York, after it struck a cautious tone ahead of the key Christmas and Black Friday trading periods.
'Based on softening sales and profit trends that emerged late in the third quarter and persisted into November, the company believes it is prudent to plan for a wide range of sales outcomes in the fourth quarter, centred around a low-single-digit decline in comparable sales, consistent with those recent trends. Similarly, the company is now planning a wide range for its fourth quarter operating margin rate centred around 3%,' Target said.
Target's quarterly results contrasted with a largely positive update from Walmart on Tuesday. Walmart shares added to Tuesday's 6.5% gain with 0.7% rise on Wednesday.
US Federal Reserve board governor Christopher Waller said recent signs of easing inflation pressures and a slowing US economy could allow the central bank to dial back the pace of interest rate hikes.
His comments came after reports showing US inflation eased in October, with the consumer price index logging its lowest annual rise since January - fuelling hopes that price rises are starting to slow.
Gold dropped sharply to $1,769.29 an ounce early Thursday from $1,777.45 late Wednesday. Brent oil fetched $92.76 a barrel, up from $91.89. Against the yen, the dollar was quoted at JP¥138.91, down from JP¥139.43.
Still to come on Thursday, there is a eurozone inflation reading at 1000 GMT, before the UK autumn statement around 1230 GMT.
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