London midday: Stocks fall as survey shows weakness in UK manufacturing

London stocks fell on Monday as a survey on UK manufacturing showed continued weakness in the sector and as oil prices slid.

UK manufacturing sector activity remained stuck in the doldrums in March, according to the CBI Industrial Trends survey, with factory output falling at the fastest pace in more than six years.

A survey of total order books in March found a negative balance of -14%, with 34% of businesses revealing order books were below normal and 20% reporting they were above normal. This balance compares to the -17% in February and -15% in January.

"There are some positives for manufacturers – notably sterling’s recent appreciable overall softening as well as still pretty low oil and commodity prices, which support their ability to price competitively to try and gain business," said Howard Archer," chief UK and European economist at IHS Global Insight.

"However, while the recent overall marked weakening of the pound and still low oil and commodity prices are welcome news for UK manufacturers, they will be concerned by current ongoing muted global economic activity and an uncertain outlook."

Archer added that the 23 June referendum on Britain's membership in the European Union adds to the uncertain outlook. He said that a vote to leave the EU would see the UK economy "suffer markedly" for some time with negative repercussions for manufacturers.

A drop in oil prices also weighed on equities. At 1142 GMT Brent crude fell 0.17% to $41.13 per barrel and West Texas Intermediate declined 0.73% to $40.84 per barrel.

Meanwhile, Chinese officials tried to soothe concerns about the nation’s economic slowdown on Sunday. Vice premier Zhang Gaoli told a high-level economic forum that recent data until early March, including fixed-asset investment and employment, showed that the economy was improving.

"We don't want to shy away from saying that China's economy is facing downward pressure, but overall the progress is steady," he said.

Closer to home, a report from Rightmove showed the average house price in England and Wales has passed an average of £300,000 for the first time in March. Driven by increases in central, South West and North East England, the average asking price for homes rose 7.6% year-on-year to £303,190 this month from £299,287 in February.

There is little else in the way of economic data on Monday with US existing home sales at 1400 GMT the only notable release still to come.

On the corporate front, mining stocks were the biggest fallers on the FTSE 100 including Antofagasta and Glencore.

Sainsbury’s jumped after it was given the all-clear to buy Argos-owner Home Retail for £1.4bn after the market closed last Friday.

Centamin was under the cosh after reporting a fall in full year profits due to a weaker gold price.

Synthomer rallied after announcing the $226m (£156m) acquisition of Hexion Performance Adhesives & Coatings.

Market Movers

FTSE 100 (UKX) 6,180.64 -0.15%
FTSE 250 (MCX) 16,883.86 -0.10%
techMARK (TASX) 3,080.59 0.23%

FTSE 100 - Risers

Shire Plc (SHP) 3,817.00p 3.41%
Tesco (TSCO) 198.50p 1.87%
Sainsbury (J) (SBRY) 278.10p 1.79%
Pearson (PSON) 908.00p 1.51%
Paddy Power Betfair (PPB) 8,995.00p 1.47%
Berkeley Group Holdings (The) (BKG) 3,223.00p 1.19%
Johnson Matthey (JMAT) 2,624.00p 1.00%
Whitbread (WTB) 3,965.00p 0.99%
Ashtead Group (AHT) 885.00p 0.97%
Carnival (CCL) 3,525.00p 0.80%

FTSE 100 - Fallers

Antofagasta (ANTO) 494.10p -3.97%
Glencore (GLEN) 157.10p -2.30%
Aviva (AV.) 477.90p -1.75%
Provident Financial (PFG) 2,926.00p -1.61%
Randgold Resources Ltd. (RRS) 6,410.00p -1.54%
Rolls-Royce Holdings (RR.) 705.50p -1.54%
Anglo American (AAL) 547.30p -1.46%
Coca-Cola HBC AG (CDI) (CCH) 1,435.00p -1.31%
Old Mutual (OML) 194.10p -1.27%
Fresnillo (FRES) 976.50p -1.16%

FTSE 250 - Risers

Allied Minds (ALM) 436.70p 5.15%
Synthomer (SYNT) 343.30p 5.05%
McCarthy & Stone (MCS) 247.70p 4.51%
Interserve (IRV) 459.60p 2.70%
NCC Group (NCC) 252.00p 2.36%
Vedanta Resources (VED) 317.10p 2.29%
UK Commercial Property Trust (UKCM) 83.30p 2.27%
Dechra Pharmaceuticals (DPH) 1,210.00p 2.11%
Just Retirement Group (JRG) 149.50p 2.05%
Saga (SAGA) 184.10p 1.94%

FTSE 250 - Fallers

Halfords Group (HFD) 402.50p -4.96%
Brown (N.) Group (BWNG) 342.80p -4.78%
Drax Group (DRX) 267.50p -3.25%
Supergroup (SGP) 1,436.00p -3.17%
Polypipe Group (PLP) 339.90p -3.02%
Mitie Group (MTO) 271.00p -2.62%
Tullow Oil (TLW) 220.00p -2.57%
Bodycote (BOY) 605.50p -2.42%
Ocado Group (OCDO) 290.80p -2.25%
Meggitt (MGGT) 408.40p -2.20%