6th Jan 2014 10:44
LONDON (Alliance News) - UK stocks are trading mixed Monday as a raft of services PMI data from across Europe and the UK fails to spark investors into action at the beginning of the first full trading week of 2014.
By mid morning, the FTSE 100 is down 0.1% at 6,727.17, the FTSE 250 is up 0.2% at 16,053.30, and the AIM All-Share index is marginally lower at 685.38.
A raft of services PMI data released early Monday has served to reinforce recent trends of a bullish German economy and a weak French economy. However, the divergence was not as severe as had been expected. Although the German service sector continued to expand in December, the number fell to 53.5 from 55.7 in November, missing expectations of a more modest decline to 54.0.
Meanwhile, the French service sector contracted less than estimated in December, final data from Markit Economics showed. The final Services Activity Index fell to 47.8 in December, a 6-month low, from 48.0 in November, but ahead of the 47.4 reading expected by economists.
The Italian number climbed to 47.9 in December from 47.2 in the previous month. Economists had been expecting a more significant increase to 48.7.
Overall, the eurozone's private sector growth accelerated as estimated in December. The seasonally adjusted composite output index, which measures performance of manufacturing and service sectors, rose to a three-month high of 52.1 in December from 51.7 in November, matching flash estimates.
In the UK, service sector activity slowed unexpectedly in December as new order growth eased. The headline business activity index fell to a six-month low of 58.8 in December from 60 in November. Nonetheless, the latest reading remained comfortably above the boom-or-bust threshold of 50, indicating robust expansion of the sector.
In Asia, stocks mostly closed in the red, with Japanese shares bearing the brunt of the selling as investors played catch-up with the global sell-off during Japan's long holiday break. A gauge of China's services industries fell to 50.9 last month from 52.5 in November, adding to signs of slowing growth in the world's second-largest economy.
The Nikkei closed down 2.4%, while the Sang Heng closed 0.6% lower.
In the forex market, sterling dropped in the immediate aftermath of the weaker-than-expected UK services PMI data. The pound currently trades close to a two week low against the dollar at USD1.6356 and at a six-day low against the euro of EUR1.2014.
The euro, on the other hand, climbed against the majority of its major competitors, excluding the Swiss franc. By mid-morning, the euro trades at USD1.3604, JPY142.251 and CHF1.2310.
At the individual UK stock level, the nonlife insurance FTSE 350 sector index, up 1.3%, is biggest rising sector, pushed higher by RSA Insurance Group, up 7%.
The company's share price has jumped after the Sunday Telegraph reported that the independent investigation into the background to the GBP200 million capital shortfall at RSA?s Irish operations is expected to conclude that it was an isolated incident with no further write-downs needed.
Moreover, in the run-up to the report, which is set to be published on Thursday, UBS has added RSA to its Most Preferred list, increasing its price target to 113.00 pence from 100.00p. UBS believes that, "while there are significant uncertainties ... the balance of risks is to the upside."
FTSE 250-listed Centamin, up 3.2%, is amongst the biggest risers in the FTSE 250. The metals and minerals producer said it increased total gold produced in its fourth quarter and surpassed the company's full-year guidance, as its Sukari process plant continued to provide high levels of productivity.
Its total gold production for the three months ended December 31 was 91,546 ounces, a 7.2% increase on 85,413 ounces in the previous year and an 8.0% increase from 84,757 ounces in the previous quarter.
Still to come in the data calendar Monday, the German consumer price index is expected at 1300 GMT. In the US, factory orders data and the ISM non-manufacturing index are released at 1500 GMT.
By James Kemp; [email protected]; @jamespkemp
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