London midday: Stocks maintain losses amid concerns over growth, Brexit
London stocks were still in the red by midday on Monday as investors fretted about global growth and Brexit developments, with a better-than-expected reading on German business sentiment doing little to improve the mood.
The FTSE 100 was down 0.4% at 7,179.21, while the pound was off 0.2% against the dollar at 1.3178 and 0.3% weaker versus the euro at 1.1649.
Investors were keeping a close eye on Brexit-related headlines as Theresa May gave an update on her strategy at a cabinet meeting after ministers denied reports over the weekend that a number of them were plotting to oust her from the top job.
Monday is going to be a long day for UK parliamentarians, said IG market analyst Chris Beauchamp, with the votes on a series of amendments not expected until 2200 GMT.
"Each week in the Brexit saga promises to be a ‘crunch week’, and despite suggestions to the contrary, it seems unlikely that even a promise by the PM to resign will get her deal over the line. The country is simultaneously bored of Brexit and desperate for a resolution, and this is why the two extremes seem to be the most desirable alternatives. But politics is lived in grey, not black and white, and months if not years of wrangling and negotiation probably lie ahead."
Meanwhile, worries about global growth were weighing on market sentiment around the world, with the US central bank's more dovish than expected policy announcement last week following uninspiring economic doing little to reassure investors.
CMC Markets analyst Michael Hewson said: "The sharp slide in yields at the end of last week merely serves to highlight while some central banks do have some ammunition in the monetary policy toolbox, like the Federal Reserve, there are others that much less, and the gradual flattening of yield curves generally would appear to suggest that bond markets think the global recover is starting to roll over."
There was some good news in the form of Germany's latest Ifo survey, however, which showed business confidence unexpectedly improved in March.
The Ifo business climate index rose to 99.6 this month from a revised 98.7 in February, beating expectations for a reading of 98.5. The current assessment index increased to 103.8 from 103.6, topping expectations for a reading of 102.0.
In addition, the expectations index improved to 95.6 from 94.0 in February, coming in in line with forecasts.
Andrew Kenningham, chief Europe economist at Capital Economics, said that although the Ifo headline is a relief following last week's disappointing German manufacturing figures, it does not suggest that the German economy is out of the woods.
"For a start, the manufacturing component of the survey actually fell (from 9.1 to 6.6) which implies that the recession in that sector may still be getting worse. And the business expectations index published by CES Ifo today is still consistent on past form with manufacturing output contracting by around 2% year-over-year."
Data out at the end of last week from IHS Markit showed that German manufacturing activity contracted for the third month in a row in March. The flash purchasing managers' index for the sector fell to 44.7 from 47.6 the month before, missing expectations for a reading of 48.0 and marking the lowest level in six-and-a-half years.
In equity markets, equipment rental firm Ashtead and plumbing products maker Ferguson - which both have a big presence in the US - were under the cosh amid worries about an economic slowdown Stateside.
Rolls-Royce retreated as San Francisco-based activist investor ValueAct Capital Management cut its stake in the company to 9.48% from 10.94%, while United Utilities was knocked lower by a downgrade to 'hold' from 'buy' at Deutsche Bank.
Wood Group slumped after it agreed the sale of its Terra Nova Technologies division - a conveying and material handling systems solutions business - to Murray & Roberts subsidiary Cementation Americas for $38m. The stock was hit by a downgrade to 'underperform' from 'hold' at Jefferies.
Doorstep lender Provident Financial fell as it once again urged its shareholders to reject a £1.3bn hostile bid from smaller rival Non-Standard Finance, and announced the appointment of a new managing director of Vanquis Bank.
Going the other way, satellite telecommunications group Inmarsat surged after agreeing to be bought by a group of private equity firms and pensions funds led by Apax in a $3.4bn deal.
Medical products and technologies company ConvaTec rallied as it has appointed Karim Bitar - the chief executive of animal genetics group Genus - as its new CEO with effect from 30 September. Genus shares fell sharply.
Debenhams shares recovered to trade up, after Sports Direct slammed the department store chain for rejecting a bid for its Danish business, Magasin du Nord, which it said was in excess of fair value and would address its liquidity problems.
Market Movers
FTSE 100 (UKX) 7,179.21 -0.39%
FTSE 250 (MCX) 18,855.69 -0.75%
techMARK (TASX) 3,481.75 -1.04%
FTSE 100 - Risers
Schroders (SDR) 2,689.00p 0.82%
Aviva (AV.) 413.00p 0.76%
Hargreaves Lansdown (HL.) 1,786.00p 0.70%
HSBC Holdings (HSBA) 617.10p 0.67%
NMC Health (NMC) 2,438.00p 0.58%
Royal Bank of Scotland Group (RBS) 249.60p 0.56%
Standard Chartered (STAN) 581.30p 0.47%
Hiscox Limited (DI) (HSX) 1,571.00p 0.26%
Standard Life Aberdeen (SLA) 260.10p 0.23%
Taylor Wimpey (TW.) 174.85p 0.20%
FTSE 100 - Fallers
Smith (DS) (SMDS) 331.60p -3.13%
Ashtead Group (AHT) 1,812.00p -2.58%
Rolls-Royce Holdings (RR.) 880.80p -2.57%
United Utilities Group (UU.) 846.80p -1.95%
Imperial Brands (IMB) 2,539.50p -1.89%
BAE Systems (BA.) 461.40p -1.83%
Mondi (MNDI) 1,680.00p -1.70%
TUI AG Reg Shs (DI) (TUI) 772.80p -1.60%
Smiths Group (SMIN) 1,409.00p -1.57%
Scottish Mortgage Inv Trust (SMT) 485.86p -1.53%
FTSE 250 - Risers
Inmarsat (ISAT) 549.40p 8.53%
Convatec Group (CTEC) 140.70p 4.80%
Domino's Pizza Group (DOM) 234.30p 3.44%
Dechra Pharmaceuticals (DPH) 2,554.01p 3.07%
McCarthy & Stone (MCS) 127.00p 2.25%
IP Group (IPO) 92.30p 1.54%
FirstGroup (FGP) 91.20p 1.39%
Merlin Entertainments (MERL) 341.10p 1.01%
TalkTalk Telecom Group (TALK) 107.90p 0.94%
Millennium & Copthorne Hotels (MLC) 470.00p 0.86%
FTSE 250 - Fallers
Wood Group (John) (WG.) 500.60p -8.25%
Sophos Group (SOPH) 295.20p -7.11%
Genus (GNS) 2,240.00p -5.17%
Bodycote (BOY) 804.50p -4.74%
Computacenter (CCC) 1,120.00p -4.60%
Hunting (HTG) 565.00p -4.24%
Morgan Advanced Materials (MGAM) 243.89p -3.75%
Aggreko (AGK) 774.60p -3.46%
TBC Bank Group (TBCG) 1,508.00p -3.46%
Rotork (ROR) 271.80p -3.34%