London midday: Weak China data sends equities lower

UK stocks were under pressure on Monday after weak Chinese manufacturing data added to worries about the slowdown in the world’s second largest economy.

The official purchasing managers’ index for China manufacturing fell to 49.7 in January from 49.7 the previous month, missing analysts’ expectations for a reading of 49.6 and below the 50 level that separates a contraction from an expansion in sector activity.

The private PMI from Caixin on China manufacturing also registered a contraction in January at 48.4. However it was better than December’s 48.2 and analysts’ estimates of 48.1.

“For an extended period economic data from Beijing has repeatedly followed a negative trajectory and this has compounded the growing concerns that capital outflows may accelerate as the economy continues to slow,” said FXTM research analyst Lukman Otununga.

“Sentiment towards the Chinese economy is heavily bearish and despite the People’s Bank of China (PBoC) pledging to maintain a prudent monetary policy in 2016, this visible deceleration may force the central bank to unleash aggressive monetary policy in a bid to revive growth.”

A better-than-expected report from Markit on UK manufacturing PMI failed to lift sentiment. The PMI roe to 52.9 in January from 52.1 in December, beating forecasts for a reading of 51.6.

Markit's Eurozone manufacturing PMI was confirmed at 52.3 in January, as expected, up from December's 53.2.

Markit also releases US manufacturing PMI for January at 1445 GMT, while ISM publishes its manufacturing index for January at 1500 GMT.

Bank of England data revealed that British mortgage approvals for house purchases rose to 70,837 in December from 70,424 in November, beating estimates of 69,600.

“It seems that shrewd consumers are rushing to grab competitive deals amidst uncertainty about when interest rates will shift from their current record lows,” said BBA chief economist Richard Woolhouse.

However, net consumer credit slowed to £1.16bn from £1.47bn in November, the weakest since May.

Still to come, the US personal consumption expenditure report is due at 1330 GMT and US construction spending figures will be released at 1500 GMT.

Meanwhile, oil prices declined on dimming prospects of a deal on a production cut by global oil producers to address the supply glut. Brent crude fell 0.05% to $35.97 per barrel and West Texas Intermediate dropped 0.9% to $33.29 per barrel 1130 GMT.

In company news, Ryanair flew higher after posting a jump in third quarter profit as traffic grew strongly and the budget airline announced a €800m share buyback programme.

Premier Oil surged after it resumed trading on Monday as the terms of its deal to buy the UK North Sea assets of German power company E.ON were amended so that it no longer constitutes a reverse takeover.

HSBC declined as a Reuters report said the bank has imposed a hiring and pay freeze across the bank globally in 2016 in an effort to cut costs.

Prudential tumbled after announcing that Michael McLintock has decided to retire as chief executive of its subsidiary M&G Investments.

BT Group gained after reporting a 3% increase in third quarter revenue to £4.59bn.

Market Movers

FTSE 100 (UKX) 6,066.79 -0.28%
FTSE 250 (MCX) 16,500.13 0.08%
techMARK (TASX) 3,175.48 0.30%

FTSE 100 - Risers

BT Group (BT.A) 500.40p 3.21%
Mondi (MNDI) 1,161.00p 2.20%
Sky (SKY) 1,104.00p 2.03%
Anglo American (AAL) 282.85p 1.95%
Fresnillo (FRES) 735.50p 1.87%
ARM Holdings (ARM) 1,011.00p 1.81%
Pearson (PSON) 801.50p 1.58%
easyJet (EZJ) 1,572.00p 1.55%
InterContinental Hotels Group (IHG) 2,332.00p 1.52%
Sage Group (SGE) 628.50p 1.21%

FTSE 100 - Fallers

Prudential (PRU) 1,332.50p -2.56%
HSBC Holdings (HSBA) 483.40p -1.81%
BP (BP.) 369.45p -1.77%
Standard Chartered (STAN) 464.25p -1.43%
Legal & General Group (LGEN) 240.10p -1.40%
Tesco (TSCO) 171.20p -1.27%
Aviva (AV.) 475.50p -1.10%
BAE Systems (BA.) 510.50p -1.07%
Old Mutual (OML) 167.90p -1.06%
SSE (SSE) 1,436.00p -0.97%

FTSE 250 - Risers

UDG Healthcare Public Limited Company (UDG) 550.00p 4.96%
Allied Minds (ALM) 295.30p 4.57%
Home Retail Group (HOME) 141.90p 3.80%
Hastings Group Holdings (HSTG) 166.10p 3.42%
Clarkson (CKN) 2,121.00p 3.21%
Interserve (IRV) 480.30p 2.98%
AO World (AO.) 156.30p 2.83%
Mitchells & Butlers (MAB) 297.30p 2.55%
Nostrum Oil & Gas (NOG) 281.90p 2.51%
OneSavings Bank (OSB) 313.80p 2.48%

FTSE 250 - Fallers

Vedanta Resources (VED) 236.20p -3.24%
esure Group (ESUR) 243.70p -2.91%
IP Group (IPO) 181.00p -2.74%
Evraz (EVR) 60.85p -2.41%
Rathbone Brothers (RAT) 2,207.00p -2.35%
NMC Health (NMC) 948.00p -2.17%
Zoopla Property Group (WI) (ZPLA) 210.30p -1.87%
Ocado Group (OCDO) 259.40p -1.78%
William Hill (WMH) 382.30p -1.72%
Just Eat (JE.) 367.10p -1.69%