London midday: FTSE weighed down by poor data and Greek concerns

Weak economic data and ongoing concerns about Greece weighed on market sentiment in the UK on Tuesday, with banking stocks providing a drag on the blue-chip FTSE 100 index.

London’s Footsie was down 0.5% at 6,806 by midday, after data showed that UK industrial production unexpectedly dipped 0.2% in December.

Economists, who had expected growth of 0.1%, were disappointed by a 1.4% drop in mining and quarrying production, which accounted for the biggest drag on the headline figure.

Commenting on the figures Paul Hollingsworth at Capital Economics said: "December's industrial production figures confirmed that the sector's recovery fizzled out in the fourth quarter. And although we expect this weakness to prove short-lived, we doubt that 2015 will be an especially strong year for manufacturers."

Meanwhile, the annual rate of Chinese inflation fell dramatically to a five-year low of 0.8% in January from 1.5% the month before, missing consensus forecasts of a slowdown to 1%.

Analysts at Barclays said “there are a number of reasons to worry that deflation in China could reappear” and an easing of inflation “should induce the People’s Bank of China to ease monetary policy further”.

In other economic data, the British Retail Consortium said that UK retail sales grew at a 1.6% year-on-year rate in January but by just 0.2% in like-for-like terms, short of the estimate of 0.5%.

Worries about the future of Greece were also acting as a backdrop ahead of a meeting of Eurozone finance ministers on Wednesday, as the new government looks to ease the terms of its €240bn bailout.

“With the EU Commission stating that ‘expectations are low’ for a final resolution to the issue this week, and the Greek’s adamant they won’t be ‘blackmailed’, the markets look set for a prolonged period of Greek-inspired uncertainty,” said analyst Connor Campbell from Spreadex.

Supermarket react to Kantar data, banks fall

Supermarket stocks were in focus after Kantar data revealed that Tesco returned to sales growth for the first time in a year, while Morrisons enjoyed its best performance since December 2013 as sales fell by 0.4%. Sainsbury, however, saw shares fall after losing its position as the second-largest retailer by market share to Asda.

Banking peers Standard Chartered, HSBC and Barclays were among the worst performers. StanChart was hit with a downgrade by Deutsche Bank to ‘sell’, while HSBC continued to feel the heat from allegations it helped customers with tax avoidance in Switzerland.

Mining stocks were also out of favour, pulling back after a strong performance on Monday with Randgold Resources and Anglo American both falling. Anglo declined after saying that profits at its part-owned South African iron ore division sank in 2014, while Randgold was weighed down by a ratings cut at Deutsche Bank to ‘hold’.

Royal Mail was also a heavy faller after JPMorgan Cazenove downgraded its stance on the postal delivery group to ‘neutral’ and cut its target price for the shares from 575p to 505p.

After an unscheduled announcement, shares in Mondi were up as the paper and packaging group revealed that earnings for the full year would be at least 20% higher than the previous year.

UK engineering group Babcock gained after saying it expects to hit forecasts for the full year after strong trading momentum continued into the third quarter, despite the collapse in oil prices causing “uncertainty” in some divisions.

Market Movers
techMARK 3,078.30 +0.25%
FTSE 100 6,806.12 -0.45%
FTSE 250 16,612.71 +0.20%

FTSE 100 - Risers
Morrison (Wm) Supermarkets (MRW) 187.70p +5.45%
Marks & Spencer Group (MKS) 489.70p +2.99%
Babcock International Group (BAB) 1,058.00p +2.92%
easyJet (EZJ) 1,723.00p +2.87%
Dixons Carphone (DC.) 424.30p +2.49%
Tesco (TSCO) 238.25p +2.08%
Mondi (MNDI) 1,226.00p +1.74%
InterContinental Hotels Group (IHG) 2,655.00p +1.72%
Coca-Cola HBC AG (CDI) (CCH) 1,097.00p +1.67%
Taylor Wimpey (TW.) 136.70p +1.64%

FTSE 100 - Fallers
Royal Mail (RMG) 433.00p -4.73%
Antofagasta (ANTO) 690.00p -3.70%
Tullow Oil (TLW) 408.10p -3.29%
Standard Chartered (STAN) 909.40p -3.19%
Anglo American (AAL) 1,148.50p -3.00%
Randgold Resources Ltd. (RRS) 5,260.00p -2.86%
Rio Tinto (RIO) 3,008.50p -2.79%
BHP Billiton (BLT) 1,499.50p -2.79%
Fresnillo (FRES) 871.00p -2.79%
Weir Group (WEIR) 1,827.00p -2.77%

FTSE 250 - Risers
Micro Focus International (MCRO) 1,164.00p +5.63%
RPS Group (RPS) 227.50p +4.41%
Zoopla Property Group (WI) (ZPLA) 181.40p +4.19%
Drax Group (DRX) 405.70p +4.05%
Hikma Pharmaceuticals (HIK) 2,407.00p +3.17%
Rightmove (RMV) 2,521.00p +2.73%
Evraz (EVR) 185.90p +2.71%
esure Group (ESUR) 245.20p +2.59%
Afren (AFR) 9.60p +2.51%
Thomas Cook Group (TCG) 130.80p +2.51%

FTSE 250 - Fallers
Hunting (HTG) 509.00p -7.20%
Soco International (SIA) 298.00p -3.87%
Vedanta Resources (VED) 442.80p -3.74%
Wood Group (John) (WG.) 607.00p -3.73%
Petrofac Ltd. (PFC) 778.50p -3.29%
Centamin (DI) (CEY) 67.50p -3.23%
Infinis Energy (INFI) 189.30p -3.17%
WH Smith (SMWH) 1,272.00p -2.90%
Premier Oil (PMO) 166.40p -2.80%
Kaz Minerals (KAZ) 238.20p -2.74%