London close: Stocks hit by lacklustre factory PMI and US-China trade worries
London stocks finished the Monday session with moderate losses on the back of uninspiring UK manufacturing figures offset better-than-expected Chinese data, although concerns about Sino-US trade relations also weighed.
The FTSE 100 was down 0.82% at 7,285.94, while the pound was down 0.1% against the US dollar at 1.2913 and by 0.5% versus the euro to 1.1679.
Data out earlier showed that the UK manufacturing sector continued to struggle in November amid political uncertainty.
The IHS Markit/CIPS UK manufacturing purchasing managers' index printed at 48.9 last month from October’s 49.6, but was a slightly improvement on the initial flash estimate for November of 48.3. The consensus was also for 48.3.
The sector has now recorded a reading below the 50.0 mark that separates contraction from expansion for seven successive months, however.
Output, new orders and employment all fell. Stockpiles accrued ahead of the now-delayed 31 October Brexit deadline were also run down.
Rob Dobson, director at IHS Markit, said: "November saw UK manufacturers squeezed between a rock and hard place, as the uncertainty created by further delay to Brexit was accompanied by growing paralysis ahead of the forthcoming general election.
"Downturns in output and new orders continued amid a renewed contraction in exports. The pace of job losses also hit a seven-year high, as firms sought to reduce overheads in the face of falling sales."
The UK figures dampened earlier optimism over China’s manufacturing sector, after a private survey showed that it expanded at its fastest pace in three years last month.
The Caixin Markit manufacturing purchasing managers’ index rose to 51.8 in November from 51.7 in October, marking its fastest expansion since December 2016 and beating expectations for a reading of 51.4.
Meanwhile, the official manufacturing PMI released at the weekend showed a return to growth for the first time in seven months. The PMI ticked up to 50.2 in November from 49.3 the month before, coming in above the 50.0 level that separates contraction from expansion. This followed six consecutive months below 50.0 and was ahead of expectations for a reading of 49.5.
Also weighing on the mood was a report on news website Axios suggesting that a phase one trade deal between the US and China had stalled because of the Hong Kong legislation passed in the US last week. Citing a source close to US President Trump’s negotiating team, Axios said a deal would not be agreed until the end of the year at the earliest.
A tweet by Trump in which he said he was reinstating steel tariffs on Brazil and Argentina didn't exactly help the mood either.
In equity markets, online grocer Ocado was a drag after announcing the launch of a £500m bond issue to fund capital expenditure in relation to its Ocado Solutions commitments and for general corporate purposes.
Hiscox was weaker amid expectations the insurer will drop out of the FTSE 100 this week, to be replaced by budget airline easyJet.
Precious metals miner Fresnillo lost its shine after narrowing its 2019 outlook for gold and silver.
TUI shares were knocked lower by a downgrade to 'market perform' at Bernstein, while Land Securities and Derwent London lost ground after downgrades at JPMorgan.
Outside the FTSE 350, fashion retailer Ted Baker was under the cosh after saying that it had overstated the value of the inventory on its balance sheet by up to £25.0m and will carry out a review of the issue.
On the upside, paper and packaging companies Smurfit Kappa and Mondi were on the rise, with traders pointing to an initiation by Exane of US peer International Paper at 'outperform' as the trigger behind their share price gains.
Miners were firmer, with Rio Tinto, Glencore and BHP all higher after the Chinese data. Rio and Glencore were also boosted by rating upgrades at RBC Capital Markets.
FTSE 100 - Risers
Flutter Entertainment (FLTR) 8,924.00p 1.41%
Imperial Brands (IMB) 1,723.00p 1.16%
Auto Trader Group (AUTO) 568.40p 1.14%
Tesco (TSCO) 231.50p 0.92%
Anglo American (AAL) 2,042.50p 0.79%
Evraz (EVR) 373.10p 0.73%
Rio Tinto (RIO) 4,230.00p 0.68%
Melrose Industries (MRO) 231.10p 0.65%
Morrison (Wm) Supermarkets (MRW) 199.35p 0.53%
BHP Group (BHP) 1,718.80p 0.51%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,227.00p -7.40%
Burberry Group (BRBY) 2,005.00p -4.71%
SEGRO (SGRO) 863.00p -3.47%
TUI AG Reg Shs (DI) (TUI) 1,027.50p -3.39%
Vodafone Group (VOD) 148.38p -3.25%
Hargreaves Lansdown (HL.) 1,806.00p -2.64%
NMC Health (NMC) 2,445.00p -2.55%
Sage Group (SGE) 736.40p -2.31%
Meggitt (MGGT) 628.40p -2.27%
Schroders (SDR) 3,221.00p -2.21%
FTSE 250 - Risers
Tullow Oil (TLW) 135.90p 3.63%
Royal Mail (RMG) 215.50p 3.36%
Ferrexpo (FXPO) 147.40p 2.79%
Mediclinic International (MDC) 396.20p 2.48%
Rank Group (RNK) 252.00p 2.43%
Sanne Group (SNN) 660.00p 2.33%
William Hill (WMH) 182.50p 2.13%
National Express Group (NEX) 473.00p 2.03%
Polypipe Group (PLP) 500.00p 1.92%
John Laing Group (JLG) 387.20p 1.84%
FTSE 250 - Fallers
Sirius Minerals (SXX) 3.47p -5.90%
FDM Group (Holdings) (FDM) 920.00p -5.35%
Pets at Home Group (PETS) 240.80p -4.44%
Aston Martin Lagonda Global Holdings (AML) 527.40p -4.18%
Serco Group (SRP) 149.50p -3.92%
Barr (A.G.) (BAG) 565.00p -3.91%
Trainline (TRN) 451.00p -3.43%
Workspace Group (WKP) 1,075.00p -3.24%
Wood Group (John) (WG.) 340.10p -3.19%
Avast (AVST) 434.00p -3.13%