London midday: Stocks slide as UK manufacturing growth slows

London stocks were under pressure by midday on Thursday as data showed UK manufacturing activity growth unexpectedly eased in November.

The FTSE 100 fell 1.06% to 6,712.18 points.

The Markit/CIPS manufacturing purchasing managers’ index fell to 53.4 in November from 54.2 the month before and a 27-month high of 55.4 in September, missing expectations for a reading of 54.5. A weak pound driving up price pressures at manufacturers was blamed for the slowdown. However, it remained above the 50 level that separates an expansion from a contraction.

Rob Dobson, senior economist at IHS Markit, said: “The latest PMI indicates that the UK manufacturing sector remained in good health during November. Although the recent growth spurt showed further signs of slowing, the pace of expansion is still solid and above its long-term trend. This should be sufficient to ensure manufacturing is a positive contributor to fourth quarter GDP.”

The pound rose 0.90% against the dollar at $1.2619 in response to higher manufacturing input costs that raise the chance of higher consumer prices next year. Bank of England Governor Mark Carney has said the central bank will have limited tolerance to inflation rise above its 2% target, which could prompt a hike in interest rates.

Earlier, data showed Chinese manufacturing expansion also slowed although it was better than expected.

Caixin's Chinese manufacturing sector PMI slipped from a 27-month high of 51.2 in October to 50.9 for November, edging past forecasts for a reading of 50.8.

In the eurozone, IHS Markit’s final manufacturing PMI came in at 53.7 in November, in line with the flash estimate and up from 53.5 in October.

Separately, the eurozone unemployment rate fell to 9.8% from 9.9% the month before and 10.6% in October 2015. This is the lowest rate recorded in the euro bloc since July 2009. The rate for September was revised down to 9.9% from a previous estimate of 10%.

Meanwhile, oil prices continued to rally after OPEC on Wednesday agreed to reduce production by 1.2m barrels a day to 32.5m barrels from January next year.

Brent crude rose 1.18% to $52.46 per barrel and West Texas Intermediate edged up 0.92% to $49.90 per barrel at 1146 GMT.

“Still, it’s not over until the fat oil minister sings. Attention now turns to non-OPEC producers including Russia for the next meeting on 9 December,” said Jasper Lawler, market analyst at CMC Markets.

“There is still a modest risk of failure, but it appears quite likely that, assuming Russia cuts output by 300,000, the remaining 300,000 barrels per day deficit will be filled by the likes of China, Mexico and some South American countries.”

Oil giants BP and Royal Dutch Shell benefitted from the oil price surge, topping the FTSE 100.

Elsewhere, Legal & General gained as Barclays raised its rating on the stock to ‘overweight’ from ‘equal weight’ and lifted the target price to 276p from 194p, saying it believes the risk of a UK recession has faded while the Solvency II capital requirements of writing bulk annuities is much more efficient than previously expected.

Residential property business Grainger edged down despite posting a jump in annual profit and hiking its dividend.

Daily Mail & General Trust was in the black as it reported a drop in adjusted pre-tax profit and operating profit but a rise in revenue for the year, with results ahead of expectations overall.

Great Portland Estates nudged lower after saying it has let a further 25,200 sq. ft. of office space in its recently completed development at 30 Broadwick Street, London W1.

Investors in London were also digesting the latest data from building society Nationwide, which showed annual house price growth slowed a touch in November. Prices were up 4.4% from a year ago compared to a 4.6% increase last month.

On the month, prices were up 0.1%, while the average cost of a home was £204,947.

Market Movers

FTSE 100 (UKX) 6,712.18 -1.06%
FTSE 250 (MCX) 17,447.68 -0.56%
techMARK (TASX) 3,215.78 -1.10%

FTSE 100 - Risers

Royal Dutch Shell 'B' (RDSB) 2,156.00p 1.77%
BP (BP.) 467.10p 1.67%
ITV (ITV) 170.40p 1.43%
Legal & General Group (LGEN) 239.10p 1.40%
Capita (CPI) 531.00p 1.24%
Royal Dutch Shell 'A' (RDSA) 2,049.50p 1.16%
Royal Bank of Scotland Group (RBS) 196.40p 1.08%
Dixons Carphone (DC.) 334.90p 0.93%
Smiths Group (SMIN) 1,423.00p 0.85%
Barclays (BARC) 216.95p 0.46%

FTSE 100 - Fallers

Fresnillo (FRES) 1,142.00p -4.83%
Unilever (ULVR) 3,060.50p -4.24%
Severn Trent (SVT) 2,112.00p -3.43%
Coca-Cola HBC AG (CDI) (CCH) 1,642.00p -3.41%
International Consolidated Airlines Group SA (CDI) (IAG) 419.50p -3.23%
Compass Group (CPG) 1,329.00p -3.06%
Carnival (CCL) 3,927.00p -2.89%
Old Mutual (OML) 184.80p -2.69%
Mondi (MNDI) 1,591.00p -2.57%
British American Tobacco (BATS) 4,282.00p -2.54%

FTSE 250 - Risers

Hunting (HTG) 580.00p 7.41%
Amec Foster Wheeler (AMFW) 458.80p 5.23%
Weir Group (WEIR) 1,883.00p 4.15%
Wizz Air Holdings (WIZZ) 1,734.00p 3.46%
Tullow Oil (TLW) 307.80p 3.36%
BGEO Group (BGEO) 3,039.00p 2.70%
IMI (IMI) 993.50p 2.42%
Aggreko (AGK) 835.50p 2.20%
Keller Group (KLR) 793.50p 2.12%
Rotork (ROR) 239.40p 2.09%

FTSE 250 - Fallers

Hochschild Mining (HOC) 204.30p -6.41%
Ascential (ASCL) 265.00p -4.09%
Acacia Mining (ACA) 381.20p -3.96%
Britvic (BVIC) 550.00p -3.76%
Bellway (BWY) 2,359.00p -3.40%
Allied Minds (ALM) 362.70p -3.38%
Pennon Group (PNN) 792.00p -3.18%
Sports Direct International (SPD) 306.00p -3.16%
TR Property Inv Trust (TRY) 278.00p -2.97%
TalkTalk Telecom Group (TALK) 155.00p -2.94%