London pre-open: Stocks to drop on weak Chinese manufacturing data

The FTSE 100 was called to open 34 points lower at 6,694.

China’s private Caixin/Markit manufacturing purchasing managers’ index released earlier showed a drop to 49.7 in December from 50.2 in November. This marked the lowest reading since May 2017 and the first contraction in 19 months and missed expectations of 50.1. The figures confirmed a trend seen in the official PMI released on Monday, which slipped to 49.4 in December - its weakest level since early 2016.

London Capital Group analyst Jasper Lawler said: "An increasing amount of data is pointing to the Chinese economy losing steam and with new orders falling for the first time in two and a half years, the outlook doesn’t look great either."

The weak Chinese data overshadowed news overnight that US President Trump was reaching out to Congress to help end the partial government shutdown. Trump has reportedly invited congressional leaders to a White House briefing on border security on Wednesday.

On the UK data front, Markit’s manufacturing PMI is at 0930 GMT.

In corporate news, Playtech said it would pay an extra €28m in tax to Israel after an audit covering the 10 years to 2017.

The company said it had reached a deal with the Israeli tax authorities over transfer pricing adjustments with no penalties imposed as a result of the audit.

Centamin executive chairman Josef El-Raghy will remain in the role as a non-executive director until 2020 after the Egyptian gold miner said it had not yet identified a suitable replacement.

El-Raghy, whose executive duties were handed over to a new executive team last year, will be replaced by one of the three non-executive directors at the AGM next year.

Energean Oil and Gas said it had signed a $900m, 19 year gas sales deal with IPM Beer Tuvia Ltd.

The contract is subject to necessary approvals and contingent on results of the company's 2019 drilling programme, which includes the drilling of four wells in Israel.