London close: Stocks end lower after PMIs miss forecasts

UK equities slid on Monday as manufacturing data around the globe missed expectations.

Markit’s purchasing mangers’ index on UK manufacturing fell to 51.9 in December from 52.5 in November, missing analysts’ estimates of 52.8. A reading above 50 signals an expansion in activity while a level below that indicates a contraction.

Ruth Miller, UK economist at Capital Economics, said “given the recent strengthening in sterling and the continued weakness in overseas demand, the manufacturing sector is still highly dependent on domestic demand”.

With prospects at home looking less rosy as the boost to real incomes from low inflation and near zero interest rates fades, Miller added that "2016 looks as though it will be another tough year for UK manufacturers".

In China, Caixin’s PMI on manufacturing fell to 48.2 in December from 48.6 the previous month, below expectations of 48.9, adding to concerns about the economic slowdown in the world’s second largest economy.

Asian stocks were in the red after short-selling in China on Friday as investors dumped holdings ahead of the imminent expiration of a share sales ban on listed companies’ major shareholders, imposed at the high of last year’s market meltdown.

On a brighter note, Markit’s PMI on Eurozone manufacturing was revised upwards to 53.2 in December from the 'flash' estimate of 53.1. Analysts had expected an unchanged reading. November’s print was revised down from 53.1 to 52.8.

Elsewhere in Europe, German inflation surprisingly slowed to 0.2% year-on-year in December from 0.3% the month before, with economists having forecast a rise to 0.4%. The report comes ahead of Tuesday’s Eurozone inflation report for December which is expected to show an improvement.

Across the Atlantic, the Institute for Supply Management’s manufacturing PMI dropped to 48.2 in December from 48.6 in November.

Markit’s US manufacturing PMI came in at 51.2 in December, down from 52.8 in November and a flash estimate of 51.3, hitting its lowest level since October 2012.

US construction spending unexpectedly fell in November, according to the latest figures from the Commerce Department. Spending slipped 0.4% on the month compared with expectations for a 0.6% increase and a downwardly-revised 0.3% gain in October.

Meanwhile, oil prices reversed gains earlier in the session amid concerns about the row between Saudi Arabia and Iran. Saudi Arabia cut ties with Iran on Sunday in response to the invasion of its embassy in Tehran.

At 1655 GMT Brent crude fell 1.24% to $36.83 per barrel and West Texas Intermediate dropped 1.6% to $36.45 per barrel on late session profit taking.

Still to come, Federal Reserve policymaker John Williams speaks after the closing bell.

On the company front, mining stocks slid on the back of a 2.93% decline in copper prices and worse-than-expected UK and China manufacturing PMIs. Anglo American, Glencore and BHP Billiton were among the top fallers in the FTSE 100.

Randgold Resources, however, rallied as gold prices jumped 1.39% and silver prices increased 0.45% on the Comex.

Insurance companies RSA Insurance, Direct Line and Aviva slumped after UBS estimated net losses of £150m to £308m from the damage of storms Desmond, Eva and Frank.

Diageo was sitting lower after it completed the sale of its major wine interests, including US-based Chateau and Estate Wines and the UK-based Percy Fox arm, to Treasury Wine Estates.

Grainger edged higher after saying it had exchanged contracts with Turbo Group Holdings to sell its Retirement Solutions business on or before 20 May, subject to Turbo gaining approval from the Financial Conduct Authority. Grainger expects a £55m profit on the sale of its equity release division.

Market Movers

FTSE 100 (UKX) 6,093.43 -2.39%
FTSE 250 (MCX) 17,093.29 -1.93%
techMARK (TASX) 3,190.70 -1.96%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 4,243.00p 2.41%
Fresnillo (FRES) 710.50p 0.35%
easyJet (EZJ) 1,737.00p -0.17%
United Utilities Group (UU.) 932.50p -0.32%
Royal Dutch Shell 'B' (RDSB) 1,538.00p -0.32%
TUI AG Reg Shs (DI) (TUI) 1,207.00p -0.33%
SABMiller (SAB) 4,055.00p -0.36%
GlaxoSmithKline (GSK) 1,364.50p -0.62%
Royal Dutch Shell 'A' (RDSA) 1,515.00p -0.72%
Land Securities Group (LAND) 1,166.00p -0.93%

FTSE 100 - Fallers

Anglo American (AAL) 277.70p -7.26%
Old Mutual (OML) 167.20p -6.54%
Glencore (GLEN) 85.27p -5.76%
Shire Plc (SHP) 4,453.00p -5.21%
Antofagasta (ANTO) 445.70p -5.03%
Tesco (TSCO) 142.20p -4.88%
Burberry Group (BRBY) 1,137.00p -4.85%
Prudential (PRU) 1,457.50p -4.80%
GKN (GKN) 293.90p -4.70%
Provident Financial (PFG) 3,211.00p -4.63%

FTSE 250 - Risers

Allied Minds (ALM) 427.00p 6.75%
Grainger (GRI) 243.50p 4.60%
Entertainment One Limited (ETO) 174.60p 4.55%
Keller Group (KLR) 871.00p 4.50%
Tullow Oil (TLW) 170.10p 2.66%
Acacia Mining (ACA) 183.50p 1.94%
Cairn Energy (CNE) 160.40p 1.71%
Vectura Group (VEC) 178.70p 1.53%
Centamin (DI) (CEY) 65.20p 1.24%
NMC Health (NMC) 850.00p 1.13%

FTSE 250 - Fallers

Ocado Group (OCDO) 284.50p -6.45%
Evraz (EVR) 68.55p -6.42%
CLS Holdings (CLI) 1,716.00p -5.71%
Rotork (ROR) 172.40p -5.64%
SSP Group (SSPG) 306.80p -5.60%
Drax Group (DRX) 231.00p -5.48%
Euromoney Institutional Investor (ERM) 941.00p -5.43%
Fidelity China Special Situations (FCSS) 136.50p -4.94%
Genus (GNS) 1,482.00p -4.63%
BBA Aviation (BBA) 180.40p -4.60%