(Alliance News) - European equities made a tepid start to trading on Tuesday, with hawkish words from a US central banker keeping stocks in check.

The FTSE 100 index opened down 6.85 points, or 0.1%, at 7,503.87. The FTSE 250 was down 88.88 points, or 0.5%, at 17,888.52, and the AIM All-Share was down 2.17 points, or 0.3%, at 715.47.

The Cboe UK 100 was down 0.1% at 748.65, the Cboe UK 250 fell 0.5% at 15,593.49, and the Cboe Small Companies was largely unmoved at 13,377.66.

In European equities on Tuesday morning, the CAC 40 in Paris and the DAX 40 in Frankfurt each fell 0.5%.

Sterling was quoted at USD1.2073 early Tuesday, lower than USD1.2143 at the London equities close on Monday. The euro was trading hands at USD1.0476, down from USD1.0508. Against the yen, the dollar was quoted at JPY149.73, down slightly versus JPY149.78.

"The quarter-end flows effect has faded. Markets are steadily back on a short-bond/long-dollar track, helped by an improvement in US ISM manufacturing and hawkish Fed comments. EUR/USD and GBP/USD look on track to test the 1.0400 and 1.2000 support levels," analysts at ING commented.

In Asia on Tuesday, the Nikkei 225 index in Tokyo ended down 1.6%. In Shanghai, financial markets remained closed for Golden Week, while financial markets in Hong Kong reopened, with the Hang Seng index down 2.8% in late trade.

In the US on Monday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, the S&P 500 was little changed, while the Nasdaq Composite rose 0.7%.

The US Federal Reserve will likely need to keep interest rates higher for longer in order to firmly bring down inflation, a senior Fed official said.

"The most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals," Fed Vice Chair for Supervision Michael Barr told a conference in New York in prepared remarks.

"I expect it will take some time," he continued, adding that his decision would be guided by "a range of incoming data."

The S&P/ASX 200 in Sydney closed down 1.3%. The Reserve Bank of Australia decided to hold interest rates at 4.1% for the fourth meeting running, but said further monetary tightening may be required.

In London, boohoo slumped 8.0% as it cut revenue guidance.

The AIM listing posted a wider loss and revenue fall in its first-half, but believes it has a "clear path to improved profitability and getting back to growth".

For the six months ended August 31, revenue fell 17% to GBP729.1 million from GBP882.4 million a year prior. The fast fashion firm's pretax loss stretched to GBP26.4 million from GBP15.2 million.

Chief Executive John Lyttle said: "Over the first half, we have made substantial progress across key projects and initiatives, including the launch of our US distribution centre. We have seen significant improvements in sourcing lead times and invested in pricing to reinforce our value credentials. We have identified more than GBP125 million of annualised cost savings that support our investment programme. Our confidence in the medium-term prospects for the group remains unchanged as we execute on our key priorities where we see a clear path to improved profitability and getting back to growth."

Looking to the full-year, boohoo now predicts its revenue will decline between 12% and 17% from GBP1.77 billion achieved the year prior. This is due to the "slower volume recovery than previously anticipated" and the company plotting "more profitable sales within our labels". Its previous revenue forecast ranged from a flat outcome to a 5% decline.

boohoo's adjusted earnings before interest, tax, depreciation and amortisation margin is still expected to land between 4% and 4.5%. Its first-half adjusted Ebitda margin improved to 4.3% from 4.0% a year earlier.

Greggs shares fell 1.6% despite reporting largely positive trading, though the lack of a guidance hike may have been a disappointment to investors.

The bakery chain said it got a boost from its evening trading, sales made after 1600, and its digital channels in the 13 weeks to September 30. Total sales rose 21% on-year during the period. Company-managed shop like-for-like sales were up 14%.

"As we had expected, the rate of cost inflation has eased as we annualise on the significant commodity-led increases experienced in 2022. At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share. We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions," the company said.

Greggs expects a full-year outcome in line with expectations.

Housebuilder Vistry fell 2.7% after Jefferies cut the stock to 'hold' from 'buy'.

Burberry sat at the bottom of the large-cap index, after UBS lowered it to 'sell' from 'neutral'.

Gold was quoted at USD1,821.15 an ounce early Tuesday, lower than USD1,833.40 on Monday. Brent oil was trading at USD89.99 a barrel, down from USD90.70.

By Eric Cunha, Alliance News news editor

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