London close: PMIs, jobs data, broker comment drag FTSE lower
- FTSE ended 50.93 points lower at 6,679.18
- UK, Eurozone PMI comes in weak
- US jobs increase by 209,000
techMARK 2,751.56 -0.48%
FTSE 100 6,679.18 -0.76%
FTSE 250 15,402.70 -0.60%
The FTSE ended significantly lower as weak Eurozone and UK manufacturing data, US jobs figures and broker downgrades weighed on markets.
After dipping around the midday point and again in the final two hours of trade, the FTSE ultimately ended 50.93 points lower at 6,679.18.
UK manufacturing activity slowed to its worst level in a year last month, fuelling fears that the country's fragile economic recovery may be faltering.
The UK manufacturing sector purchasing managers' index (PMI) for July came in at 55.4, versus a reading of 57.2 the month before as both output and orders slowed.
Meanwhile, activity in the Eurozone manufacturing sector remained unchanged at seven-year lows despite continued overall growth, fuelling speculation that the European Central Bank (ECB) will act again to boost the region's economy.
The final Eurozone manufacturing PMI for the month of July was revised down from the flash estimate of 51.9 to remain unchanged from June's seven-month low of 51.8.
"Weak manufacturing PMI data sent European shares spiralling lower to catch up with the losses seen in US markets late yesterday but markets pulled back off their lows mid-session after a tepid NFP report showed no wage growth and job creation that missed expectations in July," CMC market analyst Jasper Lawler said.
"The PMI data seen in Europe today as well as the near bankruptcy of Banco Espirito Santo in Portugal is a good indication of the problems that remain in the European economy which are not being reflected in European stock prices. That said, it's not been economic fundamentals holding up stock prices in Europe, it has been easy monetary policy from the Fed and the ECB."
In the US, non-farm payrolls increased by 209,000 in July, compared to expectations of 230,000, while the unemployment rate edged up to 6.2% from 6.1%.
Adding to the weak sentiment, Israel said it was resuming military operations, claiming that Hamas broke the planned ceasefire within hours of it being agreed. According to reports, nearly 30 were killed in Gaza from an Israeli attack on Friday morning.
"With last night's 72-hour humanitarian Gaza ceasefire having already been ignored and some mixed macro data publications, global equities have resumed their southerly course, weighed down by myriad geopolitical/sovereign risk," said Michael van Dulken, head of research at Accendo Markets.
Capita and United Utilities hit by Credit Suisse downgrades
Capita and United Utilities were heavy fallers after Credit Suisse downgraded its rating on the stocks to 'neutral' and 'underperform', respectively.
Schroders continued to move lower following Thursday's results, which saw the group warn that "the short-term outlook for retail investor demand is uncertain given no clear trend in markets", although in the longer term it was encouraged by a wide range of growth opportunities across the business.
Healthcare group Smith & Nephew was the strongest riser as investors turned to defensive stocks in the face of a wider market sell-off. The medical device maker was also lifted by a second-quarter report that modestly beat forecasts.
Adjusted earnings per share rose 13% to 20.4 cents in the second quarter as a result of a rebalancing of the business towards higher growth markets. Consensus estimates were for earnings of 19.4 per share. Revenues increased 3% to $1.14bn, ahead of the $1.13bn forecast.
British Airways and Iberia owner International Airlines Group was flying higher as it moved into the black in the first half, said cost-cutting should help it boost annual profits and announced it was buying 16 Airbus jets.
IMI climbed as investors chose to focus on the 3% rise in organic revenue rather than the same percentage drop in first half turnover. The engineering group said the operating margin declined by 60 basis points from 17.6% to 17.0%, while adjusted pre-tax profit came in at £127m, down from £134m a year earlier. On a statutory basis, pre-tax profit slumped 9% from £117m to £106m.
FTSE 100 - Risers
Smith & Nephew (SN.) 1,065.00p +3.80%
BG Group (BG.) 1,208.50p +3.11%
Royal Mail (RMG) 428.10p +2.56%
International Consolidated Airlines Group SA (CDI) (IAG) 338.20p +2.24%
IMI (IMI) 1,445.00p +1.98%
Petrofac Ltd. (PFC) 1,111.00p +1.28%
Travis Perkins (TPK) 1,689.00p +0.84%
Smiths Group (SMIN) 1,285.00p +0.78%
Ashtead Group (AHT) 900.00p +0.73%
Barratt Developments (BDEV) 351.50p +0.66%
FTSE 100 - Fallers
United Utilities Group (UU.) 856.00p -3.82%
Severn Trent (SVT) 1,877.00p -3.00%
Schroders (SDR) 2,329.00p -2.55%
Johnson Matthey (JMAT) 2,884.00p -2.53%
Standard Life (SL.) 365.50p -2.48%
Aviva (AV.) 493.70p -1.95%
Capita (CPI) 1,180.00p -1.83%
Prudential (PRU) 1,342.50p -1.83%
National Grid (NG.) 840.00p -1.81%
London Stock Exchange Group (LSE) 1,903.00p -1.81%
FTSE 250 - Risers
Just Eat (JE.) 215.50p +6.95%
Imagination Technologies Group (IMG) 189.00p +6.12%
Direct Line Insurance Group (DLG) 299.40p +5.05%
Afren (AFR) 114.10p +3.73%
PayPoint (PAY) 1,087.00p +3.62%
CSR (CSR) 545.00p +3.12%
Fisher (James) & Sons (FSJ) 1,353.00p +2.89%
Evraz (EVR) 98.60p +2.65%
IG Group Holdings (IGG) 626.00p +2.62%
Tate & Lyle (TATE) 640.00p +2.56%
FTSE 250 - Fallers
RPS Group (RPS) 241.00p -5.68%
Ashmore Group (ASHM) 334.90p -5.61%
Infinis Energy (INFI) 222.00p -4.52%
Serco Group (SRP) 345.90p -4.37%
Spirent Communications (SPT) 98.65p -4.13%
Hiscox Ltd (CDI) (HSX) 647.00p -4.08%
Moneysupermarket.com Group (MONY) 178.40p -3.93%
Savills (SVS) 571.50p -3.63%
Renishaw (RSW) 1,783.00p -3.57%
Jupiter Fund Management (JUP) 369.30p -3.53%
NR