London midday: M&A ramps up but weak Chinese data weighs on FTSE

The UK stock market was poised to finish at their lowest level in more than three weeks on Monday despite a wave of M&A activity, as weak economic data from China dampened sentiment.

Nervousness ahead of Wednesday's Federal Reserve policy meeting and a vote on Scottish independence were also limiting risk appetite in morning trade.

London's benchmark FTSE 100 was down 0.2% at 6,791 by midday. The index has not closed below this level since 22 August when it settled at 6,775.25.

SABMiller was rising strongly early on after a takeover offer for Heineken was rejected; TUI Travel gained after agreeing to merge with holding company TUI AG; Micro Focus jumped after a tie-up with The Attachmate Group.

A spate of data out from China's statistics bureau over the weekend came in below economists' forecasts, adding to worries about a slowown in the world's second-largest economy. In particular, the annual rate of industrial production growth eased from 9% to 6.9% in August, while fixed asset investment growth slowed from 17% to 16.5%.

Tensions in eastern Ukraine were also weighing on stocks as fighting continued despite a ceasefire agreed by leaders. Northern Donetsk was the centre of the voilence over the weekend, with at least six people killed, according to reports.

Economic data was thin on the ground during the morning session, with investors awaiting a closely-watch survey on New York manufacturing and figures on US industrial production.

"US industrial production is expected to fall to 0.3% in August, down from 0.4% in July and may just add to concerns that the US economy may not be able to withstand an earlier rate hike from the Fed as may be signalled in this week’s meeting," said analyst Jasper Lawler from CMC Markets.

M&A: SABMiller, TUI Travel, Micro Focus

Shares in SABMiller jumped more than 4% after Dutch brewer Heineken confirmed that the UK company had approached its board with an offer. The latter said it had consulted with its majority shareholder and decided that its proposal is "non-actionable". Beverages peer Diageo was also in demand.

The move by SABMiller has renewed speculation that drinks giant AB InBev could be forced into making a bid for the UK group. Numis Securities upgraded SABMiller from 'add' to 'buy', saying that the group is now "in play" with AB InBev a potential acquirer. "The two companies have complementary geographical footprints, although there would be obvious competition concerns," Numis said.

TUI Travel and its German holding company TUI AG have reached an agreement on the terms for an all-share nil premium merger of the two companies, helping shares in the London stock higher.

Software group Micro Focus International surged after saying that it is to merge with The Attachmate Group in a $2.4bn deal which "presents a rare opportunity to achieve a significant increase in the scale and breadth" of the business.

Leading the downside were oil and gas stocks as crude prices declined for a second day on the back of the weak Chinese data. BP, BG Group, Tullow and Shell were all trading in the red.

Market Movers
techMARK 2,846.43 -0.06%
FTSE 100 6,790.89 -0.24%
FTSE 250 15,651.34 -0.39%

FTSE 100 - Risers
SABMiller (SAB) 3,550.50p +4.26%
Diageo (DGE) 1,845.00p +1.79%
TUI Travel (TT.) 366.40p +1.75%
InterContinental Hotels Group (IHG) 2,390.00p +1.75%
Pearson (PSON) 1,197.00p +1.61%
Bunzl (BNZL) 1,623.00p +0.93%
Fresnillo (FRES) 823.50p +0.92%
Associated British Foods (ABF) 2,643.00p +0.84%
Rio Tinto (RIO) 3,231.50p +0.83%
United Utilities Group (UU.) 854.00p +0.59%

FTSE 100 - Fallers
Sports Direct International (SPD) 689.50p -3.23%
Babcock International Group (BAB) 1,046.00p -1.78%
Hargreaves Lansdown (HL.) 987.50p -1.74%
BG Group (BG.) 1,159.50p -1.61%
Lloyds Banking Group (LLOY) 73.48p -1.47%
Rolls-Royce Holdings (RR.) 1,011.00p -1.37%
Barratt Developments (BDEV) 384.20p -1.31%
CRH (CRH) 1,466.00p -1.08%
BP (BP.) 465.10p -1.07%
ARM Holdings (ARM) 944.50p -1.05%

FTSE 250 - Risers
Micro Focus International (MCRO) 953.50p +13.18%
Telecom Plus (TEP) 1,389.00p +2.89%
Hochschild Mining (HOC) 165.80p +2.66%
African Barrick Gold (ABG) 232.10p +2.61%
Phoenix Group Holdings (DI) (PHNX) 727.50p +2.18%
Soco International (SIA) 419.80p +2.14%
Dixons Carphone (DC.) 379.40p +1.93%
Laird (LRD) 299.00p +1.60%
Spectris (SXS) 2,019.00p +1.51%
Renishaw (RSW) 1,686.00p +1.38%

FTSE 250 - Fallers
Ocado Group (OCDO) 287.80p -6.13%
Thomas Cook Group (TCG) 130.60p -3.26%
Brown (N.) Group (BWNG) 405.00p -3.16%
Aveva Group (AVV) 1,571.00p -3.02%
NMC Health (NMC) 464.90p -2.94%
Serco Group (SRP) 308.10p -2.44%
Supergroup (SGP) 1,203.00p -2.20%
PayPoint (PAY) 1,026.00p -2.19%
Bwin.party Digital Entertainment (BPTY) 97.30p -2.01%
Taylor Wimpey (TW.) 111.40p -1.76%