(Alliance News) - Stock prices in London were called to open lower on Tuesday, following a weak New York close, as some strong US data stoked interest rate hike fears.

In early UK corporate news, Ashtead Group said it expects annual results to be higher than previous guidance after a strong first half, and SSP swung to an annual profit.

UK retail sales growth picked up last month, figures on Tuesday showed, as the festive shopping season kicked off. However, sales remained below the current inflation rate, suggesting volumes have weakened on-year.

According to the latest British Retail Consortium-KPMG monitor, retail sales climbed 4.2% on year in November, topping the three- and 12-month average growth rate of 2.6%.

On a like-for-like basis, sales rose 4.1%, beating the 12-month average of 1.2% and a three-month average of 2.3%.

"Sales picked up as Black Friday discounting marked the beginning of the festive shopping season. However, sales growth remained far below current inflation, suggesting volumes continued to be down on last year. As the weather began to turn, customers were quick to purchase winter warmers, such as coats, hot water bottles, and hooded blankets. Black Friday discounts also boosted sales of home furnishings as many households traded big nights out for budget nights in," BRC Chief Executive Helen Dickinson said.

The dollar was stronger early on Tuesday, after a strong US PMI print.

Readings of the US service sector painted a mixed picture on Monday. Data from S&P Global offered a bleak outlook, though ISM's was more bullish.

The seasonally adjusted S&P Global US services PMI business activity index registered 46.2 points in November, down from 47.8 in October. At below the 50-point no-change mark, the score shows the sector remains in contraction.

The fall in business activity was largely linked to lower new orders and subdued client demand. The rate of contraction was the fastest since August and among the sharpest on record, according to S&P Global.

The Institute for Supply Management's tracker picked up, however, leading to investor concern that the Fed may not yet take its foot off the monetary policy tightening pedal.

The print "hinted that the economic activity, at least in the US services sector continues growing, and growing un-ideally faster-than-expected despite the Federal Reserve's efforts to cool it down", according to Swissquote Bank's Ipek Ozkardeskaya.

Added Hargreaves Lansdown's Susannah Streeter: "Wall Street registered its worst day in almost a month after a snapshot from the services industry showed consumer resilience was strong. This has fuelled speculation that the US central bank will have to be more Scrooge-like and make borrowing even more expensive to rein in inflation. Companies still appear to be dealing with pent-up demand with the ISM reading showing the services sector is expanding merrily."

Tuesday's economic calendar has a UK construction PMI at 0930 GMT, and US trade data at 1330 GMT.

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

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MARKETS

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FTSE 100: called down 17.0 points, 0.2%, at 7,550.54

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Hang Seng: down 0.8% at 19,368.83

Nikkei 225: closed up 0.2% at 27,885.87

S&P/ASX 200: closed down 0.5% at 7,291.30

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DJIA: closed down 482.78 points, 1.4%, at 33,947.10

S&P 500: closed down 1.8% at 3,998.84

Nasdaq Composite: closed down 1.9%, at 11,239.94

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EUR: lower at USD1.0482 (USD1.0515)

GBP: higher at USD1.2177 (USD1.2189)

USD: higher at JPY137.32 (JPY136.42)

Gold: lower at USD1,768.49 per ounce (USD1,776.79)

Oil (Brent): lower at USD83.19 a barrel (USD84.95)

(changes since previous London equities close)

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ECONOMICS

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Tuesday's key economic events still to come:

08:00 CET Germany manufacturing orders

09:30 GMT UK S&P construction purchasing managers' index

08:30 EST US international trade in goods and services

08:55 EST US Johnson Redbook retail sales index

16:30 EST US API weekly statistical bulletin

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The UK is "sleepwalking" into a food supply crisis, the country's union for farmers and growers has warned. Ahead of an emergency press conference, the National Farmers Union said the government needed to step in to assist primary producers under severe strain from soaring fuel, fertiliser and feed costs. Union president Minette Batters said egg shortages "could just be the start" as multiple farming sectors were impacted. The NFU said the next food items which would likely be impacted would be tomatoes, cucumbers and pears due to them all coming from energy-intensive crops.

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New manufacturing orders in Germany edged up monthly but continued to slide on an annual basis. According to Destatis, new factory orders climbed 0.8% monthly in October, defying FXStreet cited forecasts of a 0.2% decline. In September, new orders had fallen 2.9% from the previous month, according to a revised figure. Year-on-year, new manufacturing orders declined 3.2% in October, easing from a 9.8% drop in September.

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BROKER RATING CHANGES

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Credit Suisse cuts Mondi to 'underperform' (outperform) - price target 1,600 (1,800) pence

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JPMorgan cuts Close Brothers to 'underweight' (neutral) - price target 1,120 (1,240) pence

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JPMorgan places United Utilities, Severn Trent, Pennon on 'negative catalyst watch'

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COMPANIES - FTSE 100

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Ashtead Group reported strong revenue and profit growth in its second quarter. In the three months to October 31, the industrial equipment rental company said revenue grew by 28% to USD2.54 billion from USD2.03 billion a year before. Pretax profit jumped 40% to USD658 million from USD474 million. In the first half as a whole, revenue rose 26% to USD4.80 billion and pretax profit grew by 35% to USD1.19 billion. Ashtead now expects annual results ahead of its previous guidance. "Our business is performing well with clear momentum in robust end markets. We are in a position of strength and, with increased market clarity, have the operational flexibility to capitalise on the opportunities arising from the market and economic environment we face," Ashtead said. It raised its interim dividend by 20% to 15 cents per share.

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Phoenix Group said it expects to deliver around GBP1.2 billion in incremental new business long-term cash generation in 2022, mostly via its Standard Life branded businesses. The insurer said it also remains on track to deliver cash generation at the top end of its target range of GBP1.3 billion to GBP1.4 billion in 2022. "It is shaping up to be another outstanding year for Phoenix Group," said CEO Andy Briggs.

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COMPANIES - FTSE 250

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Speciality chemicals firm Victrex said revenue rose 11% to GBP341.0 million in the financial year that ended September 30 from GBP306.3 million in financial 2021, or by 10% in constant currency. Pretax profit slid 5% to GBP87.7 million from GBP92.5 million, however. This was due to exception items of GBP7.9 million, reflecting the first year of its enterprise resource planning software investment. Victrex proposed a final dividend of 46.14p, unchanged from the previous year. Looking ahead, it reported signs that VAR volumes are "edging down slightly" to more normalised levels. "This means the opportunity to improve on last year's record group volume is likely to be challenging," Victrex warned. However, it has seen a "steady start" to the year, and will focus on "modest" profit and revenue growth.

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Travel-focused food outlet operator SSP said revenue jumped to GBP2.19 billion in the financial year that ended September 30 from GBP834.2 million the year prior. It swung to a pretax profit of GBP25.2 million from a loss of GBP4121.2 million. The recovery is being led by the domestic and leisure travel market across both air and rail sectors. Business and commuter travel is recovering, albeit more slowly, SSP noted. Looking ahead, SSP said it is confident in its ability to manager macro-economic headwinds, and anticipates a further recovery in the medium term. "We see significant potential for further expansion in North America - a USD6 billion market in which we currently only have a 10% market share," CEO Patrick Coveney noted.

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OTHER COMPANIES

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Novacyt said it has received UK approval for its genesig Covid-19 3G real-time PCR test. This is the clinical diagnostic firm's seventh PCR test that has received approval in the UK. "This latest approval ensures we are well-positioned with our consolidated Covid-19 portfolio for any potential future outbreaks," said acting CEO James McCarthy.

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By Elizabeth Winter, senior markets reporter

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