London midday: Stocks fall ahead of US non-farm payrolls

UK manufacturing activity expanded less than expected in March as output growth remained unchanged from February’s seven-month low, data revealed on Friday.

Markit’s purchasing managers’ index came in at 51.0 in March, up slightly from February’s 34-month low of 50.8. Analysts had forecast a reading of 51.2. While the reading was above the 50 mark that signals an expansion in sector activity, the average for the first quarter of the year equalled the lowest since 2013, Markit said.

“Although March saw modest improvements in the trends for production and new orders, industry is still hovering close to the stagnation mark and will struggle to make a meaningful contribution to the next set of GDP growth figures,” said Rob Dobson, senior economist at Markit.

In the Eurozone, Markit’s PMI was revised higher to 51.6 in March from a previous estimate of 51.4, surprising analysts who had expected no change.

China’s official manufacturing PMI rose to 50.2 in March from 49.0 the previous month, beating expectations for a reading of 49.3.

The non-manufacturing PMI also edged higher in March to 53.8 from 52.7 a month earlier.

Caixin’s private PMI on China manufacturing increased to 49.7 in March from 48 in February, exceeding forecasts of 48.3.

However, Asian stocks were in the red as the better-than-expected PMIs in China failed to offset Standard & Poor’s negative outlook on China.

The ratings agency cut the outlook for China’s credit rating to negative from stable, saying the nation’s economic rebalancing is likely to take longer than previously expected.

The Nikkei was dragged lower after a survey showed business sentiment among Japan’s big manufacturers fell to the lowest in nearly three years in the first quarter.

The headline index gauging big manufacturers' sentiment stood at +6 in March, half the level seen three months ago and worse than a median market forecast of +8, the Tankan survey revealed.

Still to come, the US non-farm payrolls report at 1330 BST will be closely scrutinised as the Federal Reserve is taking into account the data in considering the timing of its next interest rate hike. Analysts predict the US added 205,000 jobs in March and the unemployment rate held at 4.9%.

Meanwhile, oil prices continued to slide on concerns about a supply glut. Brent crude fell 2.02% to $39.51 per barrel and West Texas Intermediate dropped 2.4% to $37.44 per barrel at 1147 BST.

In company news, Shire’s shares surged after Exane BNP Paribas reiterated ‘outperform’ rating and issued a target price of 5,700, indicating a potential increase of 44.27% from the current price of 3,951.

Inmarsat jumped after the satellite communications group received notification from US-based Ligado Networks, previously known as LightSquared, that it has decided to take the 30 MHz option under the pair's cooperation agreement.

RSA Insurance Group declined after it completed the sale of its operations in Colombia to Suramericana SA, the insurance subsidiary of Grupo de Inversiones Suramericana.

Home Retail dropped after its board agreed to recommend Sainsbury’s takeover offer. Sainsbury's, which still expects the transaction to complete in the third quarter of this year, has offered Home Retail shareholders 0.321 new shares in the supermarket group and 55p cash, plus 27.8p in dividends.

Standard Life edged lower as it said it had obtained regulatory approvals to increase its stake in HDFC Life to 35% from 26% for £179m.

Market Movers

FTSE 100 (UKX) 6,090.12 -1.37%
FTSE 250 (MCX) 16,769.16 -0.93%
techMARK (TASX) 3,097.18 -0.89%

FTSE 100 - Risers

Shire Plc (SHP) 4,019.00p 1.52%
Next (NXT) 5,480.00p 1.48%
Smith & Nephew (SN.) 1,158.00p 0.87%
Ashtead Group (AHT) 869.00p 0.58%
ARM Holdings (ARM) 1,017.00p 0.30%
Inmarsat (ISAT) 986.50p 0.20%
Barclays (BARC) 150.30p 0.20%
easyJet (EZJ) 1,521.00p 0.13%
Paddy Power Betfair (PPB) 9,715.00p 0.10%
Experian (EXPN) 1,246.00p 0.08%

FTSE 100 - Fallers

Royal Mail (RMG) 462.20p -3.85%
Rolls-Royce Holdings (RR.) 659.00p -3.37%
BP (BP.) 339.15p -3.14%
Burberry Group (BRBY) 1,323.00p -3.08%
Admiral Group (ADM) 1,926.00p -2.87%
Sky (SKY) 996.00p -2.73%
Tesco (TSCO) 186.80p -2.61%
Standard Chartered (STAN) 460.30p -2.59%
Pearson (PSON) 853.50p -2.46%
United Utilities Group (UU.) 900.50p -2.44%

FTSE 250 - Risers

Kaz Minerals (KAZ) 174.90p 2.64%
Clarkson (CKN) 2,272.00p 2.34%
Ocado Group (OCDO) 295.70p 1.93%
Drax Group (DRX) 276.10p 1.47%
AO World (AO.) 181.40p 1.34%
NMC Health (NMC) 1,070.00p 1.23%
SVG Capital (SVI) 507.50p 1.20%
UDG Healthcare Public Limited Company (UDG) 590.50p 1.11%
Virgin Money Holdings (UK) (VM.) 372.70p 1.03%
Aggreko (AGK) 1,087.00p 0.93%

FTSE 250 - Fallers

Sports Direct International (SPD) 360.90p -4.55%
Inchcape (INCH) 691.50p -4.42%
OneSavings Bank (OSB) 320.70p -3.64%
Petrofac Ltd. (PFC) 890.00p -3.37%
Fidessa Group (FDSA) 2,362.00p -3.28%
PZ Cussons (PZC) 292.50p -3.18%
DFS Furniture (DFS) 303.40p -3.16%
Cobham (COB) 210.40p -3.09%
Spirax-Sarco Engineering (SPX) 3,529.00p -3.05%
Ted Baker (TED) 2,640.00p -3.05%