FTSE 100 Dips Amid Investor Caution; Burberry, Aerospace Stocks Decline

The FTSE 100 closed lower as investors stayed cautious ahead of key U.S. and UK economic data. Burberry's stock fell sharply, dragging the index down. Aerospace companies also fell after Airbus cut guidance. Investors anticipate moderating inflation in the upcoming PCE data and a potential BoE interest rate cut.

Britain's FTSE 100 closed lower on Tuesday as investors stayed cautious ahead of economic data that could sway expectations on the path of U.S. and UK interest rates, and Burberry's losses weighed on the market.

The blue-chip FTSE 100 was down 0.4% at 8,247.79 points, while the mid-cap FTSE 250 dipped 1%. Burberry dropped 4.5%, the most on the benchmark index, after the luxury fashion brand gained steadily for the last three sessions.

Shares of aerospace and defence companies including Melrose Industries, Rolls-Royce and Senior PLC fell by between 1% and 2.4% after European aerospace group Airbus cut its industrial and financial guidance for the year. Traders largely avoided big bets ahead of the U.S. personal consumption expenditure data (PCE), due Friday, even as the market anticipated the numbers will show inflation moderating.

UK gross domestic product (GDP) is also due this week and could potentially add to Bank of England (BoE) policymakers' confidence of an interest rate cut in August. UK parliamentary elections on July 4 are adding to general caution and investors also expect the BoE to refrain from releasing minutes of its meeting ahead of the polls.

"The market will now focus on the U.S. PCE (personal consumption figures) more than anything until 4th of July election in the UK," Axel Rudolph, senior market analyst at IG Group, said. Ocado dropped 7.1% after multiple brokerages cut their price targets on the online grocer and technology group.

On the positive side, Carnival Corp's London-listed stock gained 9.4% after the cruise operator raised its annual profit forecast for the second time this year. Admiral Group, the top gainer on the FTSE 100, rose 2.3% after Berenberg raised its view of the stock to "buy" from "hold".

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