FTSE 100 movers: Miners slump on China data; Insurers shine

London’s FTSE 100 index was down 0.9% to 6,187.50 in afternoon trading, as investors digested disappointing Chinese data and a weaker-than-expected reading on UK manufacturing.

Heavily-weighted miners suffered the brunt of the losses after disappointing data from China, on which the sector is heavily dependent.

The China Caixin manufacturing PMI fell to 49.4 in April from 49.7 in March, missing economists’ expectations for a reading of 49.9. A reading below 50 indicates contraction.

Anglo American, Glencore, Antofagasta, Rio Tinto and BHP Billiton were the worst performers.

RBS was also under the cosh after UBS downgraded the stock to ‘neutral’ from ‘buy’ and cut the price target to 250p from 310p, pointing to significant payout uncertainty.

UBS said first-quarter adjusted pre-tax profit of RBS’s ongoing businesses beat its estimates by 16%, with all meaningful divisions to a greater or lesser extent more profitable than it had expected.

It noted that even challenged CIB turned in a smaller loss than it had estimated.

UBS said it sees broadly as much surplus capital as before. It said that despite providing for £11bn in losses and charges between 2016 and 2020 for non-core run-down, restructuring costs and legacy liabilities, it expects RBS to have the capacity to return 40% of market cap over three years.

“But despite a core bank which is outperforming our expectations and mostly composed of businesses we think attractive, the risks on the timing of capital returns are now too significant for us to maintain a buy,” UBS said.

Insurers shone thanks to a couple of upbeat broker notes.

RSA Insurance was the standout gainers on Tuesday as Barclays upgraded the stock to ‘overweight’ from ‘equalweight’ and lifted the price target to 545p from 457p.

Barclays said RSA’s full-year 2015 underlying results were “very strong”, beating company collected underlying earnings per share EPS consensus by 20%.

Most impressive was the speed at which the loss ratio has started to improve, the bank said.

It noted RSA’s plans to close the gap to the best in class players in each of its core markets, UK, Scandinavia and Canada by 2018.

“While we acknowledge that it is rare for a mid of the pack insurer to become a ‘best in class’ insurer, we do believe RSA has set out a realistic plan to get there,” it said.

Direct Line was also benefitting from a broker upgrade, as Macquarie upped its stance on the insurer to ‘neutral’ from ‘underperform’.

“The current valuation now indicates a c.6% yield p.a. over the next three years, on our forecasts. Without special dividends this yield remains at more than 4% across the period, which we believe provides investors with ample income returns in this market and limits downside risks.”

Risers

RSA Insurance Group (RSA) 473.50p 3.14%
Admiral Group (ADM) 1,900.00p 2.32%
ITV (ITV) 229.00p 1.69%
Intertek Group (ITRK) 3,308.00p 1.57%
Direct Line Insurance Group (DLG) 367.00p 1.41%
BT Group (BT.A) 449.05p 1.32%
Vodafone Group (VOD) 222.05p 1.30%
Experian (EXPN) 1,266.00p 1.20%
Sage Group (SGE) 598.50p 1.10%
GlaxoSmithKline (GSK) 1,474.00p 1.03%

Fallers

Anglo American (AAL) 689.00p -9.75%
Glencore (GLEN) 151.85p -6.78%
Antofagasta (ANTO) 456.40p -5.55%
Rio Tinto (RIO) 2,184.00p -5.06%
BHP Billiton (BLT) 889.80p -4.64%
Royal Bank of Scotland Group (RBS) 220.70p -4.04%
Rolls-Royce Holdings (RR.) 644.50p -3.73%
Standard Chartered (STAN) 531.70p -3.69%
International Consolidated Airlines Group SA (CDI) (IAG) 508.00p -3.24%
Old Mutual (OML) 180.50p -2.70%