London midday: Stocks maintain losses after weak China data

London stocks were still in the red by midday on Thursday as investors mulled weak Chinese factory data and an abrupt end to the Trump-Kim denuclearisation summit.

The FTSE 100 was down 0.6% to 7,065.91, while the pound was off 0.1% against the dollar at 1.3302 and 0.4% lower versus the euro at 1.1653.

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.

Meanwhile, 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. White House press secretary Sarah Sanders said earlier: "No agreement was reached at this time, but their respective teams look forward to meeting in the future."

IG market analyst Chris Beauchamp said this is a "natural period of weakness after the rampant bullishness of the past two months".

"Nothing about current price action, US economic data or earnings growth suggests we are poised to re-enter a bear market for equities. If anything, with central banks still dovish, the overall impression is that equities will move higher as the year goes on."

Overnight, parliament voted strongly to support an amendment that restated the commitments Theresa May made on Tuesday to allow MPs votes on no-deal and an Article 50 extension if her Brexit deal is voted down, effectively making it politically impossible for the Prime Minister to go back on her word. But 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 Beauchamp. "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 and BHP 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, with management aiming to generate at least £1bn by 2020.

Also under pressure was Mondi as full-year results beat expectations but the packaging company warned that pricing was "mixed" going into 2019.

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.

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.

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) 7,068.93 -0.54%
FTSE 250 (MCX) 19,088.68 -0.34%
techMARK (TASX) 3,450.06 -0.46%

FTSE 100 - Risers

Rentokil Initial (RTO) 346.50p 5.32%
St James's Place (STJ) 966.60p 2.70%
Vodafone Group (VOD) 135.66p 1.54%
Evraz (EVR) 564.20p 1.40%
International Consolidated Airlines Group SA (CDI) (IAG) 606.60p 1.07%
Admiral Group (ADM) 2,190.00p 0.97%
London Stock Exchange Group (LSE) 4,531.00p 0.94%
Auto Trader Group (AUTO) 477.20p 0.91%
Scottish Mortgage Inv Trust (SMT) 492.33p 0.85%
Hargreaves Lansdown (HL.) 1,713.50p 0.79%

FTSE 100 - Fallers

easyJet (EZJ) 1,242.44p -5.27%
Mondi (MNDI) 1,764.00p -4.39%
RSA Insurance Group (RSA) 505.80p -3.95%
Smith (DS) (SMDS) 334.60p -3.82%
Rolls-Royce Holdings (RR.) 948.00p -3.54%
Smurfit Kappa Group (SKG) 2,126.00p -3.36%
BHP Group (BHP) 1,759.60p -2.37%
Antofagasta (ANTO) 942.20p -2.30%
AstraZeneca (AZN) 6,144.00p -2.21%
Rio Tinto (RIO) 4,335.29p -2.03%

FTSE 250 - Risers

Metro Bank (MTRO) 1,022.00p 7.02%
Hastings Group Holdings (HSTG) 229.80p 4.93%
Merlin Entertainments (MERL) 364.60p 3.40%
Indivior (INDV) 108.50p 2.46%
Just Eat (JE.) 741.60p 2.35%
TBC Bank Group (TBCG) 1,518.00p 2.29%
Premier Oil (PMO) 75.50p 2.23%
TI Fluid Systems (TIFS) 188.40p 2.17%
Ascential (ASCL) 367.90p 2.02%
Dechra Pharmaceuticals (DPH) 2,428.00p 2.02%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 1,131.14p -17.70%
Bakkavor Group (BAKK) 147.25p -8.88%
Howden Joinery Group (HWDN) 491.60p -6.68%
Inchcape (INCH) 559.50p -5.73%
Vivo Energy (VVO) 125.76p -3.26%
Rank Group (RNK) 162.40p -2.99%
TalkTalk Telecom Group (TALK) 97.70p -2.79%
FDM Group (Holdings) (FDM) 816.00p -2.63%
Restaurant Group (RTN) 122.90p -2.54%
Coats Group (COA) 88.30p -2.43%