London close: Stocks finish lower after weak UK industrial report

London stocks finished lower on Monday as oil prices slumped and data showed a sharp drop in monthly UK industrial orders.

The FTSE 100 closed down 0.49% to 6,986.40 points while the pound dipped 0.29% to $1.2199.

“Now that the pound has stopped its freefall (for now at least), perhaps the index as a whole is beginning to look a tad overpriced,” said IG’s chief market analyst Chris Beauchamp.

“Certainly, it has shown little inclination to get back to its recent highs, with ongoing Brexit uncertainty making the UK less attractive versus a eurozone economy that appears, on the basis of today’s PMI numbers, to be looking much more attractive."

IHS Markit’s 'flash' Eurozone composite purchasing mangers’ index jumped to 53.7 in October from 52.6 in September, ahead of forecasts of 52.8 and above the 50 level that separates an expansion from a contraction.

The manufacturing PMI rose to 53.5 in October from 52.6 a month earlier, beating expectations of 52.7. The services PMI climbed to 53.5 from 52.5, compared to an estimated 52.4.

Closer to home, however, the Confederation of British Industry's monthly industrial orders balance fell to -17 in October from -5 in September, well below the consensus of -5. Although CBI said manufacturing output and orders grew in the last quarter.

“Manufacturers’ are optimistic about export prospects and export orders are growing, following the fall in sterling," said CBI's chief economist Rain Newton-Smith.

“However, the weaker pound is also feeding through to costs, which are rising briskly and may well spill over into higher consumer prices in the months ahead."

Also weighing on UK-listed shares, strategists at JP Morgan downgraded their view UK stocks from 'overweight' to 'neutral'.

The same investment bank lifted its view on Eurozone shares to 'overweight' from 'neutral'.

In the US, Markit’s PMI rose to 53.2 in October from a three-month low of 51.5 in September, surpassing estimates for a reading of 51.5.

James Bullard, President of the Federal Reserve Bank of St. Louis and voting member of the Federal Open Market Committee, said low interest rates will likely be the normal over the next two to three years. His remarks on Monday came ahead of next week's policy meeting.

Meanwhile, oil prices were under pressure as Iraqi oil minister Ali al-Luaibi said the nation wanted to be exempt from an OPEC deal to cut production.

Brent crude dipped 0.8% to $51.34 per barrel and West Texas Intermediate declined 0.99% to $50.35 per barrel at 1635 BST.

On the company front, easyJet flew higher after UBS upgraded its recommendation to ‘buy’ from ‘neutral’ but trimmed the target price to 1,050p from 1,070p. "Shares are pricing in material future value destruction – we don’t think this will be the case," said UBS analyst Jarrod Castle.

Schroders was also firmer, after it announced that Robin Stoakley - the managing director of its UK intermediary business - is stepping down after 15 years.

Petra Diamonds advanced as it reported a 30% increase in first quarter production to 1,097,523 carats.

British American Tobacco was lower after Fitch warned the proposed merger with Reynolds would put the group’s A- credit rating at risk.

Cobham slumped after it cut its trading profit guidance to £255-275m, including favourable currency impacts, due to softer conditions in the wireless and satellite communications markets.

Market Movers

FTSE 100 (UKX) 6,986.40 -0.49%
FTSE 250 (MCX) 17,860.52 -0.41%
techMARK (TASX) 3,433.55 -1.40%

FTSE 100 - Risers

Provident Financial (PFG) 3,089.00p 2.80%
DCC (DCC) 6,705.00p 1.90%
easyJet (EZJ) 931.50p 1.42%
Standard Life (SL.) 341.40p 1.40%
Schroders (SDR) 2,845.00p 1.39%
International Consolidated Airlines Group SA (CDI) (IAG) 404.80p 1.28%
Whitbread (WTB) 3,843.00p 1.26%
Antofagasta (ANTO) 525.00p 1.25%
Prudential (PRU) 1,401.00p 1.16%
Aviva (AV.) 445.30p 1.09%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,854.00p -2.78%
Anglo American (AAL) 1,065.50p -2.61%
Randgold Resources Ltd. (RRS) 6,985.00p -2.38%
United Utilities Group (UU.) 933.00p -2.20%
Burberry Group (BRBY) 1,463.00p -2.14%
Shire Plc (SHP) 4,945.50p -2.13%
AstraZeneca (AZN) 4,851.00p -2.04%
Fresnillo (FRES) 1,613.00p -2.00%
Associated British Foods (ABF) 2,475.00p -1.86%
National Grid (NG.) 1,047.00p -1.83%

FTSE 250 - Risers

Petra Diamonds Ltd.(DI) (PDL) 148.20p 6.01%
Senior (SNR) 180.50p 3.44%
B&M European Value Retail S.A. (DI) (BME) 244.60p 2.56%
Riverstone Energy Limited (RSE) 1,235.00p 2.15%
Entertainment One Limited (ETO) 237.00p 1.85%
CYBG (CYBG) 275.90p 1.85%
Man Group (EMG) 125.00p 1.79%
JRP Group (JRP) 125.60p 1.70%
Rathbone Brothers (RAT) 1,833.00p 1.55%
Investec (INVP) 497.80p 1.45%

FTSE 250 - Fallers

Cobham (COB) 139.70p -13.01%
NCC Group (NCC) 211.10p -3.61%
Aveva Group (AVV) 1,922.00p -3.37%
Ocado Group (OCDO) 268.30p -3.32%
Phoenix Group Holdings (DI) (PHNX) 855.00p -3.28%
Supergroup (SGP) 1,368.00p -3.18%
WH Smith (SMWH) 1,528.00p -3.05%
Hunting (HTG) 525.00p -2.60%
Berkeley Group Holdings (The) (BKG) 2,393.00p -2.45%
William Hill (WMH) 287.70p -2.38%