London close: Miners drag down FTSE after Chinese data disappoints

London stocks rubbed out most of their earlier losses but still lost ground on Thursday as investors mulled weak Chinese factory data.

The FTSE 100 finished down 0.5% at 7,074.73 on the last day of February, up 3.3% for the month. The pound dropped a little of its recent highs, falling 0.3% against the dollar at 1.3264 and 0.4% lower versus the euro at 1.1658.

Market analyst Connor Campbell at Spreadex linked this to the resignation of Theresa May's agriculture minister, George Eustice, who claimed a Brexit delay would be "the final humiliation for our country".

Also helping the dollar reverse an earlier position against sterling was US gross domestic product coming in at a better than expected 2.6% for the fourth quarter.

Stock market sentiment was hit by data showing that Chinese factory activity contracted to a three-year low in February. The official purchasing managers’ index released by Beijing's National Bureau of Statistics fell to 49.2 in February from 49.5 the month before, missing expectations for it to remain unchanged and still below.

Earlier news that the Vietnam summit between US President Trump and North Korean leader Kim Jong-un ended with no agreement was also weighing on the mood of some traders.

On home shores, Westminster was reacting to another government resignation the night after parliament voted strongly to support an amendment that restated the commitments Theresa May made on Tuesday, allowing MPs votes on no-deal and an Article 50 extension if her Brexit deal is voted down. Meanwhile Tory MP Jacob Rees-Mogg, prominent hard-Brexit backer, appeared to be softening his stance towards May's deal if she can secure “necessary assurances” on the divisive Irish backstop.

"Parliament continues to show that, while it might not know what form of Brexit it wants, it does at least know that it doesn’t want a no-deal," said market analyst Chris Beauchamp at IG. "Both parties are splitting, and it is more a question of which splits faster and harder than the other. Until a clear caucus emerges in favour of something to move the debate forward, we are left to watch nervously. Nothing is certain, which makes the current bounce in sterling something to monitor, in case no-deal fears resurface."

The day's economic data included the latest consumer confidence survey from GfK showed households are holding firm despite Brexit uncertainty. GfK’s long-running consumer confidence index increased by one point in February to -13, beating expectations for a reading of -15.

Joe Staton, client strategy director at GfK, said: "Despite a slowdown in overall growth and concerns about the impact of Brexit uncertainty on the UK economy, topline consumer confidence is stable again this month. Although bumping along in negative territory, the overall index score is not showing any sign of making the dramatic drop seen after the June 2016 Brexit referendum or in the early days of the last financial downturn."

Elsewhere, Nationwide's latest house price survey showed the market remained subdued in February, with its seasonally-adjusted measure of house prices down 0.1% month-to-month in February.

However, the year-over-year growth rate increased to 0.4% from 0.1% in January, coming in slightly above consensus expectations of 0.3% growth.

In equity markets, miners retreated on the back of the Chinese data, with Antofagasta, BHP and Rio Tinto both on the back foot.

RSA Insurance slumped as it posted a drop in 2018 underlying pre-tax profit, dragged lower by its London market business.

Rolls-Royce lost ground as the engine maker said it has decided to withdraw from the current competition to power Boeing's proposed new midsize aeroplane. It also reported a £1.2bn loss due to exceptional charges, though underlying earnings were much improved and free cash flow more than doubled to £641m last year.

Also under pressure was Mondi as full-year results beat expectations but the packaging company warned that pricing was "mixed" going into 2019. Peers DS Smith and Smurfit Kappa were also dented.

British American Tobacco was glowing red even as it grew underlying earnings above its target range last year despite cigarette volumes declining 3.5% as predicted. Finance director Ben Stevens also announced his retirement after 30 years with the company.

Aston Martin Lagonda was sharply lower after saying it swung to a loss of £68.2m in 2018 from a profit of £84.5m the year before, which was due to high cost associated with its listing.

On the upside, pest control giant Rentokil rallied as it reported an 8.8% increase in full-year adjusted pre-tax profit and said it expects "a slight increase" in market expectations for 2019.

British Airways and Iberia parent International Consolidated Airlines Group flew a little higher as it posted a 9.5% jump in full-year operating profit despite rising fuel prices and currency headwinds.

Building materials group CRH racked up healthy gains as it reported record earnings for 2018, thanks in part to good demand in the US.

Inmarsat was launched higher by a report that EchoStar, which dropped a $3.2bn takeover approach for the satellite business in July, is expected to renew its interest in the company soon.

Legoland and Madame Tussauds owner Merlin Entertainments was in the green as it said full-year underlying earnings rose 4.3%.

In broker note action, Premier Oil was lifted to ‘buy’ at Berenberg and Rio Tinto was cut to ‘neutral’ at Goldman Sachs.

AstraZeneca, Barclays, Diageo, EasyJet, Micro Focus International, Beazley and SSP Group were among the companies whose stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,074.73 -0.46%
FTSE 250 (MCX) 19,181.35 0.14%
techMARK (TASX) 3,454.92 -0.32%

FTSE 100 - Risers

Rentokil Initial (RTO) 351.00p 6.69%
St James's Place (STJ) 972.40p 3.31%
NMC Health (NMC) 2,704.00p 3.28%
ITV (ITV) 131.10p 3.03%
Marks & Spencer Group (MKS) 272.80p 2.79%
Taylor Wimpey (TW.) 181.40p 2.49%
Hargreaves Lansdown (HL.) 1,742.00p 2.47%
Standard Life Aberdeen (SLA) 246.75p 1.88%
British Land Company (BLND) 604.60p 1.82%
Hiscox Limited (DI) (HSX) 1,599.00p 1.72%

FTSE 100 - Fallers

easyJet (EZJ) 1,227.50p -6.40%
Mondi (MNDI) 1,728.50p -6.31%
Smith (DS) (SMDS) 335.50p -3.56%
Wood Group (John) (WG.) 520.40p -3.41%
BHP Group (BHP) 1,746.00p -3.13%
Antofagasta (ANTO) 937.00p -2.84%
Rolls-Royce Holdings (RR.) 955.00p -2.83%
Smurfit Kappa Group (SKG) 2,142.00p -2.64%
RSA Insurance Group (RSA) 513.00p -2.58%
AstraZeneca (AZN) 6,154.00p -2.05%

FTSE 250 - Risers

Inmarsat (ISAT) 399.80p 6.02%
Dechra Pharmaceuticals (DPH) 2,472.00p 3.87%
Fisher (James) & Sons (FSJ) 1,990.00p 3.86%
Just Eat (JE.) 746.40p 3.01%
Petrofac Ltd. (PFC) 427.80p 2.99%
TI Fluid Systems (TIFS) 189.50p 2.77%
Merlin Entertainments (MERL) 361.60p 2.55%
Workspace Group (WKP) 981.50p 2.51%
Safestore Holdings (SAFE) 612.50p 2.42%
Rathbone Brothers (RAT) 2,304.00p 2.22%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 1,080.00p -21.42%
Bakkavor Group (BAKK) 145.00p -10.27%
Metro Bank (MTRO) 889.50p -6.86%
Howden Joinery Group (HWDN) 493.10p -6.40%
Inchcape (INCH) 565.00p -4.80%
Elementis (ELM) 179.50p -4.22%
Equiniti Group (EQN) 200.50p -2.91%
Greencore Group (GNC) 196.00p -2.87%
Superdry (SDRY) 518.00p -2.45%
Bank of Georgia Group (BGEO) 1,674.80p -2.24%