9:30AM London is lower in morning trade Tuesday on broker downgrades.

The benchmark FTSE 100 Index lost 40.30, or 0.6%, to 6657.40 in London in morning session.

Economic news

Government figures revealed that the annual rate of consumer price inflation fell to 2.4% in June from 2.5% in May, a smaller decline than had been expected. The core CPI annual rate, which excludes energy, food, alcohol and tobacco prices, advanced from 1.9% to 2%, its highest level for 10 years and raised fears of further interest rate hikes.

Advancers of the Day

Some utility stocks gained on positive comment. Northumbrian Water Group rose 1.4 % and Severn Trent added 0.2%. UBS raised its recommendation for both Northumbrian Water and Severn Trent to buy from neutral.

Tate & Lyle rallied 3.9% after Goldman Sachs boosted its recommendation for maker of the sweetener Splenda to buy from neutral.

Decliners of the Day

BHP dipped 0.7% and weighed on the other mining stocks after Deutsche Bank lowered its recommendation for the mining company to hold from buy, on strength in the share price this year and a stronger Australian dollar.

Anglo American, the world second-biggest mining company, shed 0.7% and Antofagasta, owner of copper mines in Chile, fell 0.8%.

Rolls-Royce dropped 2.4% after Credit Suisse Group cut its recommendation for the second-largest aircraft-engine maker in the world to neutral from outperform on sustained dollar weakness and valuations.

Kelda Group, water-supplier to about 4.7 million people in northeastern England, retreated 2.1% after UBS AG downgraded the shares to reduce from neutral, announcing that the shares are expensive relative to the water utility sector.

8:30AM HK, Taiwan gain, China surges and Japan falls in Asia.

Asian markets ended mixed on Tuesday.

In Tokyo, Japanese stocks declined with insurance companies such as Millea Holdings Inc. and power producers after a magnitude 6.8 earthquake shook northwest Japan yesterday, damaging a nuclear reactor. Millea Holdings lost 1.7%, Sompo Japan Insurance finished 2.3% lower, and Mitsui Sumitomo Insurance shed 2.1%. Sumitomo, the third-largest trading house, in the country, climbed 2.7% and Cosmo Oil, the fourth-biggest refiner in Japan, surged 2.5%. The Nikkei 225 Average closed 0.1% lower at 18,217.27.

In Hong Kong, the market rose for the third time in four days. The benchmark Hang Seng Index rose 0.5% to close at 23,057.30. Cnooc Ltd. climbed after Deutsche Bank AG raised share-price estimates for oil producers and crude oil hovered near an 11-month high. Cnooc, surged 3% and PetroChina, the largest oil producer in China, added 0.7%. Industrial & Commercial Bank, the biggest lender in China, added 2.1%.

In Taiwan, the Taiex index gained 1%. Taiwan Cement, the biggest maker of the building material on the island, advanced 4.4% and Cathay Financial, the largest life insurer, rose 4.2%. The national benchmark target was raised by UBS on better corporate earnings and a shift by investors from bonds and property toward stocks as interest rates increase.

In China, the benchmark Shanghai Composite Index soared 1.9% to close at 3,896.19. Property developers surged following the appreciation of the yuan and banks gained on a stable earnings outlook for the sector. Beijing Tianhong Baoye Real Estate surged up to its limit, ended 10% higher. Shenzhen Development Bank followed other local lenders in its guidance of strong first-half earnings. Shenzhen Development Bank jumped 9.8%, Industrial Bank closed 9.6% higher and China Merchants Bank rose 6%.

In Sydney, the index S&P/ASX 200 rose 0.01% to 6,381.60. Mining company Rio Tinto gained 0.4%, bouncing back from losses recently triggered by worries it may be overpaying for Alcan.

The market in Seoul was closed for national holiday.