In the UK, the day started with the upbeat news that the trade deficit narrowed by more than expected in June, on the back of rising exports to Europe and falling imports. The deficit was �7.4bn against expectations of �7.7bn.
But then the gloom set in with news from the Royal Institute of Chartered Surveyors that house prices saw falls in July. The falls were prompted by a glut of houses on the market, while buyers were thin on the ground.
The bad news from abroad then came thick and fast: The Bank of Japan�s decision to keep monetary policy unchanged � with no further quantitative easing or strategy to address the rising yen � troubled markets. Equally, the growth in China�s trade surplus suggested a lack of domestic demand to the pessimists.
Then, of course, there was the continued uncertainty from the Federal Reserve meeting. The meeting is due to start after the close of European markets.
The FTSE 100 dipped 34 points to 5,376. It was led down by the resource stocks, which continued to be troubled by the apparent weakness of China. Kazakhmys, Vedanta Resources and Xstrata were all among the day�s top fallers.
Tui Travel, owner of Thomson Holidays, saw the biggest dip of the day. It said that profits would be at the lower end of expectations after the ash cloud and redundancy fears put people�s holiday plans on hold. The third quarter is usually one of the strongest periods for the group, but the muted recovery in sales seen in April had not been sustained. The shares fell 10% to 203p.
Another holiday group � Intercontinental Hotels � was also suffering despite reporting results ahead of forecasts. Its shares dipped 4.1% to 1,078p after it said that earnings visibility was poor and the outlook remained uncertain.
There was more good news for the shareholders of International Power, who are set to receive a 92p per share special dividend following the group�s takeover by GDF Suez. But the shares have already seen significant rises and could not sustain further gains, falling 2% to 372.6p.
Pulling in the other direction were a range of classic defensive names. GlaxoSmithKline and AstraZeneca were among the biggest risers on the FTSE 100, gaining 2.2% to 1,177p and 1.3% to 3,348p respectively. Shire and Unilever were also favoured.
Further down the market capitalisation scale, Connaught was a surprising winner. After yesterday�s savage sell-off, investors decided that the group had some value after all and the shares rose 21.8% to 13.4p.
