Market buzz: TalkTalk speculation grows, UK services data shortens hike odds

1435: AIM-listed fashion e-retailer Koovs is shooting higher after an investment from one of India's biggest retail groups.

Future Group, which owns more than 60 brands, operates close to 2,000 retail stores and attracts footfall of more than 500m annually, has agreed to subscribe for a stake of up to 29.9% in Asos-aping Koovs.

1410: London gentrification news: a venture backed by Qatar’s sovereign wealth fund has been given the go-ahead for a contentious project to build almost 1,000 homes in London’s Elephant and Castle district.

Southwark council approved the plan late on 3 July. The development will replace a much loved but slightly down at heel shopping centre with flashy new apartment blocks, a university campus and shops.

1228: Investors seem to be speculating about potential MBO action at TalkTalk as hedge fund Toscafund Asset Management ups its stake.

Tosca increased its stake to 16.2%, from 15.1%, just a few days after TalkTalk founder Sir Charles Dunstone ‎splashed out around £750,000 to boost his stake towards 29%‎.

1214: The FTSE 100 is holding above rising support, but still offside for the day, says Mike van Dulken, head of research at Accendo Markets, with the England penalty shootout victory still on his mind.

"Trade war concerns (aggressive? global?) remain understandably front and centre, given the potential impact on many FTSE names. What we may (or may not get) in terms of a Brexit plan from this weekend's meeting between the PM and her Cabinet, is also hampering trader sentiment, along with GBP strength and it a quieter mid-week session on account of the US 4th July holiday."

He sees the Footise being kept lower as trade concerns weigh on HSBC and miners such as Rio Tinto and BHP, where investors are also likely to have China concerns, while metals prices remain weak. Van Dulken says positives for the index are from British American Tobacco, BT and Vodafone, all with defensive appeal and continuing recent momentum.

Lloyds is up as the SFO drops its Libor probe, citing "insufficient evidence".

1134: On the departure of Compass CFO Johnny Thomson, Barclays analysts view the news as "a small negative" given his "experience and quality".

"That said, given Compass’ track record and experience at the senior management levels, we think that the business will not struggle to find a suitable replacement. We think the equity story is unchanged and view Compass as a high quality, long-term compounder offering attractive TSR potential."

The FTSE 100 group is Barclays' "preferred caterer", trading at just under 21 times full year EPS, compared Sodexo is least preferred, despite trading on a forward p/e of less than 18 times.

1027: Anglo American is racking up gains on following a report that Anil Agarwal, who owns 19.35% of the company, is preparing a plan to merge Vedanta Resources and Anglo's South African business via a share swap.

According to India's Livemint, the merger of the two units would create a $7bn company controlled by Agarwal, who owns 65% of Vedanta.

0955: The UK services PMI indicates the British economy grew 0.4% in the second quarter of the year and raises the chances that the Bank of England will hike interest rates in August.

Economist Ruth Gregory at Capital Economics says that if anything the surveys might be understating growth since the service sector PMI does not account for activity on the high street, which has rebounded strongly in the second quarter so far. "Overall, then, the figures provide reassurance that services – and overall economic – growth has picked up some pace in the second quarter. As things stand, we remain comfortable in our view that interest rates will rise at the MPC’s next meeting on 2nd August."

Sam Tombs at Pantheon Macroeconomics says we should not count our chickens before they've hatched, countering that the net contribution from the retail sector to GDP will be negligible, and the PMI surveys are not a fully reliable indicator for the official activity data that will ultimately determine the Monetary Policy Committee’s next step.

"Official data show that economy-wide output was only 0.1% above its Q1 average in April, highlighting downside risk to the MPC’s forecast. As a result, it would be premature to conclude that an August rate hike is likely until the first monthly estimate of GDP for May is published next week."

0933: UK services PMI comes out higher at 55.1 compared to 54.0 expected.

0903: The eurozone composite PMI comes out slightly higher than expected at 54.9 versus the 54.8 forecast, as the services survey rises to 55.2 from 55.0, which was where it was estimated to remain.

0856: The FTSE 100 is down 16.04 points or 0.21% to 7,577.25 after around an hour of trading on Wednesday, which is likely to see lower global volumes with the US being on holiday.

The DAX is down around 0.3% and the CAC trickling 0.1% lower. The pound is flat against the dollar at 1.3195 after an earlier spike. Brent crude is also roughly flat at $77.89 per barrel.

Here's market analyst Connor Campbell at Spreadex: "That things weren’t far, far uglier after the bell is something to be thankful for, Europe largely choosing not to really react to news that China is set to impose tariffs on $34 billion of US imports, a direct retaliation to the similarly-sized tariffs going the other way set to come into effect on Friday.

He adds: "As long as Trump takes an Independence Day off from Twitter, the main mover this Wednesday looks set to be the latest round of services PMIs. The UK reading is expected to remain unchanged at 54.0, though investors will be looking for a beat given the better than forecast – to varying degrees, admittedly – manufacturing and construction PMIs earlier in the week."

0831: Wednesday's London open market report shows stocks edging lower in early trade amid ongoing trade war jitters, as investors eyed the latest reading on the UK services sector.

The FTSE 100 is down 0.4% to 7,566.05, while the pound was flat against the euro at 1.1321 and 0.2% higher against the dollar at 1.3216. Volumes were expected to a be a little lighter than usual as US markets will be closed for the Independence Day holiday.