24th Mar 2014 11:03
LONDON (Alliance News) - UK stocks are trading lower Monday as investors grow increasingly concerned by the crisis in Ukraine and another set of weak Chinese data.
Meanwhile, the euro, after jumping on the back of some stronger-than-expected PMI data from France, has been hit after PMI data for Germany and the eurozone as a whole missed expectations.
By mid-morning, the FTSE 100 is down 0.4% at 6,534.13, the FTSE 250 is down 16,069.01, and the AIM All-Share is down 0.6% at 851.46.
Having broken a three-week losing streak last week, UK equities are firmly in the red Monday.
Despite the Russian Defence Ministry denying reports that Russia was amassing troops along the border with Ukraine, investors continue to remain cautious about any potential developments.
Adding to this, the latest flash purchasing managers index from HSBC and Markit Economics revealed that China's manufacturing sector contracted further in March. The preliminary reading of the index came in at a seasonally adjusted 48.1, hitting its lowest level for eight months, having recorded 48.5 in February.
The data adds to a raft of weak data releases coming from China recently and further increases fears about the state of the world's second largest economy.
Despite this, Asian stocks closed firmly in the black. Speculation that the Chinese government will now take steps to try and bolster the economy was enough to see the Nikkei close up 1.8%, the Hang Seng up 1.9%, and the Shanghai Composite index up 0.9%.
In the forex market, it has been a volatile morning for the euro Monday. The single currency jumped against its major rivals on the back of some stronger-than-expected manufacturing and services PMI data from France, before reversing its gains in the wake of weak prints from Germany and the eurozone as a whole.
The preliminary reading of French manufacturing and services PMIs showed that the sectors unexpectedly returned to expansion in March. The manufacturing sector index rose to 51.9 in March from the 49.7 recorded in February, and ahead of economists' expectations of a reading of 49.8. The rise of the index above 50 means that the sector is expanding for the first time since February 2012.
The services sector returned to growth in March for the first time since last October. The preliminary reading came in at 51.4 in March, up from the 47.2 printed in February.
However, shortly after, preliminary survey data from Markit Economics showed that the German services sector growth slowed by more than expected in March, coming in at 54.0, down from 55.9 in February, and missing economists' estimates of a more modest decline to 55.5.
Germany's flash manufacturing PMI came in at 53.8 points. This is down from 54.8 in February and below the expected reading of 54.5.
The euro area economy expanded for the ninth consecutive month in March, but the rate of growth slowed marginally, separate data showed Monday. The data from Markit Economics showed that eurozone composite output index came in at 53.2 in March. The score was slightly lower than February's 32-month high of 53.3, from which it had been expected to be unchanged.
The flash services PMI fell to 52.4 from 52.6 in February, when it was expected to drop to 52.5. Similarly, the manufacturing PMI slid to 53.0, in line with expectations, from 53.2 in February.
Following the data, the euro trades at USD1.3766, while the pound trades at EUR1.1973.
At the FTSE 350 sector index level, the mining sector is one of the leading gainer sectors, up 0.2%, led higher by FTSE 250-listed Centamin.
Centamin, up 5.9%, is the biggest gainer in the mid-cap index despite saying that its pretax profit fell 7.4% in 2013. Although the metals and minerals producer said that its pretax profit was lower, it said that, excluding exceptional items, the company would have posted a pretax profit increase of 1.4% to USD235.0 million from USD231.7 million in 2012.
Centamin also said its revenues increased 18% to USD503.8 million from USD426.1 million the previous year, as production increases offset lower gold prices during the period.
Kentz Corporation, up 5.4%, is another big riser in the FTSE 250. The major oil and gas engineering company said pretax profit increased 4.7% to USD109.7 million in 2013 from USD104.8 million the previous year, as revenue increased 6.4% to USD1.66 billion from USD1.56 billion in 2012.
It also said that it forecasts 2014 performance ahead of previous expectations, with all three of its business units to perform strongly during the period.
At the other end of the spectrum, Diploma is the index's biggest loser, down 5%. The group said it had been hit hard by the recent rise in sterling as well as the fall in the Canadian and Australian dollar, meaning its key profit measure will only be flat this year.
The company said its revenues in the six months to the end of March are expected to be up by about 7% on the year excluding the impact of acquisitions and at constant currencies. However, half-year revenues will be up only 5% including currency movements and acquisitions, while its adjusted pretax profit is expected to be flat on the year, Diploma said.
William Hill is the heaviest faller in the FTSE 100, down 2.1%. The bookmaker's shares have been hit after Barclays lowered its price target to 370.00 pence from 393.00p.
The betting company's shares have been in free-fall since Wednesday last week after UK Chancellor George Osborne announced that the government will raise duty on gambling machines to 25%, from the current 20%, from March 1, 2015. The group's shares have now shed approximately 12% since the close of the UK equity market on Tuesday last week.
Still to come in the data calendar Monday, the Chicago Fed national activity index is scheduled to be released at 1230 GMT, ahead of the preliminary reading of US Markit manufacturing PMI for March at 1358 GMT.
Economists estimate that US factory-sector growth slowed in March, with the US manufacturing PMI reading expected to come in at 56.5, down from the 57.1 posted in February.
"The result may marginally weigh against the US dollar," says Ilya Spivak, currency analyst at DailyFX. However, after last week's hawkish FOMC outing dented concerns about the continuity of quantitative easing tapering, an aggressive reaction does not seem likely, he adds.
By James Kemp; [email protected]; @jamespkemp
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