1st Sep 2014 09:41
LONDON (Alliance News) - The FTSE 100 is trading down on Monday as economic data from the eurozone continues to show a disappointing rate of recovery in the region.
In mid-morning trade, the FTSE 100 is down 0.2% at 6,807.79, while the FTSE 250 trades up 0.1% at 15,893.62, and the AIM All-Share index trades up 0.1% as well at 781.11.
August manufacturing PMI readings for eurozone countries came in largely below expectations, highlighting the weakness of the recovery of the region. The PMI for the eurozone as a whole was 50.7, below the consensus of 50.8 and July's figure of 51.8. The reading for Europe's top economy, Germany, also was lower than expected at 51.4, missing the forecast of 52.0.
Germany also reported on Monday that GDP contracted by 0.2% quarter-on-quarter in the second quarter.
Jaisal Pastakia, investment manager at Heartwood Investment Management, said the German GDP result was not a major concern. "Contrary to some investors, we read the recent data differently. Importantly, seasonal factors influenced the second quarter data, so a pull-back in activity should have been expected. First quarter growth was unusually strong as benign weather conditions boosted construction activity, especially in Germany," Pastakia said.
However, European markets haven't taken the news so optimistically. The CAC 40 trades down 0.5% and the DAX down 0.4%.
UK PMI results for August were equally disappointing, coming in at 52.5, missing the consensus of 55.0 and down from 54.8. This news sent the pound tumbling against the dollar and now trades at USD1.6620.
UK mortgage approvals provided more evidence of a slowdown in the UK housing market. The figure for July totalled 66,569, compared to 67,085 in June. It was forecast to fall to 66,000. Meanwhile, housebuilder Berkeley Group Holdings said that since the start of its current financial year, the UK housing market has reverted to normal transactions levels from the high point in 2013,
On the London Stock Exchange, Perform Group has soared to the top of the FTSE 250, with its shares gaining 27%. The digital media company urged its shareholders to take no action after the US's Access Industries Group made a final cash offer to acquire all of the shares in the company it does not already own for 260 pence per share, valuing the company at GBP701.6 million. Perform reiterated its confidence in its standalone strategy and growth prospects, and said it remains focussed on "delivering significant value for all shareholders".
Meanwhile, shares in Tesco, and other UK grocers, continue to be amongst the heaviest FTSE 100 fallers on the back of last week's news of a cut in profit expectations by the company. Major shareholder, David Herro, told the Sunday Telegraph he has cut his investment from around 3% to 1% due to the absence of a clear strategy. The company's shares are down 1.8%.
Also Monday morning, Exane BNP has cut its price target for Tesco, Sainsbury's, Morrisons and Ocado, while also downgrading Ocado to Underperform from Neutral.
By Neil Thakrar; [email protected]
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