London close: Supermarkets drag FTSE to negative finish

The majority of UK stocks ended firmly in negative territory on Wednesday, thanks to weak UK and Eurozone manufacturing data, plunging supermarket stocks and a downbeat start to trading in the US.

The FTSE 100 closed 65.20 points to 6,557.52.

UK manufacturing activity reached a 17-month low in September on weaker demand, data showed on Wednesday.

The Markit/CIPS purchasing managers' index (PMI) fell to 51.5, the lowest level since April last year, from 52.5 in August. Economists had predicted an increase to 52.7. A reading above 50 signals expansion.

"September's CIPS manufacturing survey provided another sign that the sector's recovery lost some vim in the third quarter," Capital Economics said. "However, we doubt that this summer's softening marks the beginning of a prolonged slowdown."

Across the Channel, PMI for euro-area manufacturing fell to 50.3 in September from 50.5 a month earlier, surprising analysts who had expected it to remain unchanged.

The report comes a day ahead of the European Central Bank's meeting when markets will be watching closely to see if President Mario Draghi announces stimulus measures to address the weak economy and low inflation.

Over in the States, stronger-than-expected data on private sector hiring sparked concerns that the Federal Reserve may hike its interest rates sooner than anticipated, after private employers added 213,000 new jobs in September.

The rise marked the sixth consecutive month job gains had risen above the 200,000 unit threshold.

Supermarkets drag FTSE sharply lower

Sainsbury was in the red after it cut its annual sales forecast and said it was reviewing its dividend. Its second quarter figures were better-than-expected, although it still posted a drop of 2.8% in like-for-like sales.

Sector peer Morrisons also dropped while rival Tesco saw its share price further hit after the Financial Conduct Authority notified the grocer it will be looking into the incident, alongside an independent review by Tesco’s accountants Deloitte.
Tesco said it would continue to co-operate fully with the FCA and other relevant authorities considering the matter.

BG Group was knocked lower by Credit Suisse which restated its 'underperform' rating on the stock and cut its target price from 1,115p to 1,050p.

Royal Mail was one of just a few stocks on the up after UBS analysts upgraded their view on Royal Mail to ‘neutral’ from ‘sell’, believing anticipated difficulties have been priced in.

Royal Bank of Scotland rose thanks in part to target price increases from both Numis and Citigroup, from 368p to 370p and from 330p to 350p, respectively.

On the second tier, Afren was rising strongly after it late on Tuesday released a statement saying its ongoing independent review had found no further evidence relating to the receipt of unauthorised payments. The review is expected to be completed by mid-October.

Market Movers
techMARK 2,788.35 -0.85%
FTSE 100 6,557.52 -0.98%
FTSE 250 15,210.89 -1.10%

FTSE 100 - Risers
Royal Mail (RMG) 399.70p +1.91%
Imperial Tobacco Group (IMT) 2,679.00p +0.56%
Schroders (SDR) 2,404.00p +0.54%
Intertek Group (ITRK) 2,631.00p +0.38%
G4S (GFS) 251.60p +0.36%
Royal Bank of Scotland Group (RBS) 368.60p +0.11%
Mondi (MNDI) 1,012.00p +0.10%
Capita (CPI) 1,165.00p +0.09%
Pearson (PSON) 1,241.00p +0.08%
GlaxoSmithKline (GSK) 1,414.00p +0.07%

FTSE 100 - Fallers
Sainsbury (J) (SBRY) 234.00p -6.96%
Morrison (Wm) Supermarkets (MRW) 159.90p -4.99%
BG Group (BG.) 1,093.00p -4.12%
Johnson Matthey (JMAT) 2,825.00p -3.22%
Tesco (TSCO) 180.20p -3.22%
Weir Group (WEIR) 2,430.00p -2.88%
International Consolidated Airlines Group SA (CDI) (IAG) 357.20p -2.70%
Antofagasta (ANTO) 702.00p -2.64%
Petrofac Ltd. (PFC) 1,011.00p -2.51%
GKN (GKN) 311.50p -2.41%

FTSE 250 - Risers
Afren (AFR) 109.40p +5.70%
Countrywide (CWD) 468.00p +3.68%
Mitchells & Butlers (MAB) 367.60p +2.77%
Lancashire Holdings Limited (LRE) 653.00p +2.03%
Foxtons Group (FOXT) 219.10p +1.91%
Oxford Instruments (OXIG) 1,035.00p +1.47%
St. Modwen Properties (SMP) 371.80p +1.31%
Hiscox Ltd (CDI) (HSX) 638.00p +1.27%
Spire Healthcare Group (SPI) 292.30p +1.04%
Infinis Energy (INFI) 222.00p +0.91%

FTSE 250 - Fallers
Ferrexpo (FXPO) 105.10p -6.41%
UBM (UBM) 548.50p -5.92%
AO World (AO.) 177.00p -5.85%
Zoopla Property Group (WI) (ZPLA) 224.80p -4.99%
Evraz (EVR) 123.60p -4.92%
Just Retirement Group (JRG) 124.70p -4.88%
Lonmin (LMI) 176.80p -4.84%
Spirent Communications (SPT) 99.90p -4.49%
African Barrick Gold (ABG) 209.10p -4.43%
Ocado Group (OCDO) 254.00p -4.15%