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LONDON (Alliance News) - London shares ended lower Monday, as commodity stocks failed to benefit from a sharp rise in crude oil prices, while Rolls-Royce Holdings and BAE Systems were boosted by the announcement of new investments in defence capabilities by the UK government.

The FTSE 100 index ended down 0.5% at 6,305.49 points, and the FTSE 250 also lost 0.5% to 17,106.91, while the AIM All-Share ended flat at 730.42.

In Europe, the CAC 40 index in Paris ended down 0.4% and the DAX 30 in Frankfurt closed down 0.3%. In Asia, the Shanghai Composite shed 0.6% and the Hang Seng in Hong Kong 0.4%. The Japanese market was closed for Labor Thanksgiving day.

Wall Street was flat to higher at the London close, however, with the Dow Jones Industrial Average flat, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.

"After flirting with a 30 point drop, the Dow became somewhat perkier as the afternoon went on, seemingly lifted by a 25 month low for US manufacturing [Purchasing Manager's Index]...and a worse than expected existing home sales number," said Spreadex analyst Connor Campbell.

"It suggests that, whilst the markets jumped at signs of the Fed ending its months-long uncertainty-littered crawl towards raising rates last week, investors would still take a lift-off delaying piece of data over something more positive," Campbell said.

The US National Association of Realtors released a report on Monday showing that existing home sales pulled back by a little more than expected in October.

NAR said existing home sales fell 3.4% to an annual rate of 5.36 million in October after surging up 4.7% to a rate of 5.55 million in September. Economists had expected sales to slow to a rate of 5.40 million. Despite the monthly decrease in sales, the annual rate of existing home sales was still up by 3.9% compared to the same month a year ago.

However, it was PMI readings that provided the main economic data focus Monday.

US Markit manufacturing PMI came in at 52.6, below expectations of 53.9. This also was below the previous reading of 54.1 in October.

Other data from Markit showed that the German manufacturing and service sector both expanded in November. The service sector PMI came in at 55.6, ahead of consensus of 54.3, while manufacturing index also came ahead of forecasts, at 52.6, against consensus of 52.1.

French PMIs showed a worsening in the service sector, but an improvement in manufacturing in November. The flash Markit PMI for the services came in at 51.3, falling short of expectations of 52.6, while the manufacturing index rose to 50.8 in November from 50.6 in October, just ahead of the consensus of 50.7.

Meanwhile, the overall eurozone's services PMI came in at 54.6, ahead of consensus estimates of 54.0. The manufacturing PMI climbed to 52.8, with economists expecting it to come in at 52.2. The reading reached a 19-month high.

In London, oil-related stocks ended lower, despite a sharp increase in crude prices after Saudi Arabia signalled that it is ready to co-operate with OPEC and non-OPEC producers to preserve stability in oil markets. Prices of Brent oil and West Texas Intermediate gyrated sharply following the news but were higher by the end of London equity trading.

Brent oil was quoted at USD45.40 a barrel at the London close, recovering from an intraday low of USD43.55 a barrel and up from USD44.55 at the London stock market close on Friday. West Texas Intermediate was quoted at USD42.21 a barrel, having touched an intraday low of USD40.39 a barrel.

Oil companies recovered some ground but still ended lower. BP closed down 0.1%, while BG Group ended down 0.7% and Royal Dutch Shell 'B' 0.5%. In the FTSE 250, Nostrum Oil & Gas lost 8.9%, while oil-field services firm Amec Foster Wheeler lost 3.8%.

Miners also ended in the red with Antofagasta down 1.3%, Glencore down 1.1%, BHP Billiton down 1.5% and Anglo American down 0.9%. In the FTSE 250, KAZ Minerals ended down 3.7%.

Gold was quoted at USD1,068.60 an ounce, down from USD1,077.80 late on Friday. The pound was at USD1.5127 at the London close Monday, while the euro was at USD1.0604.

In the green, Rolls-Royce Holdings and BAE Systems ended amongst the best blue-chip performers, up 3.8% and 1.4%, respectively. UK Prime Minister David Cameron announced a GBP178.0 billion investment in defence equipment and support over the next decade as he outlined the findings from the Strategic Defence and Security Review.

The new budget represents a GBP12.0 billion uplift in total funding for defence equipment and will focus on investments which will help the UK "respond to diverse threats in an increasingly dangerous and uncertain world", according to a statement from the Ministry of Defence.

The UK government will make its Autumn budget statement on Wednesday. Meanwhile, on Tuesday, Rolls-Royce is scheduled to present details of its restructuring plans.

Home Retail Group ended at the top of the FTSE 250, up 6.6%. The Sunday Times reported a number of private equity firms are considering making GBP1.0 billion takeover bids for Home Retail, the owner of catalogue retailer Argos and DIY and garden centre chain Homebase

Several retail industry figures have been asked to advise on potential bids for the company in the wake of the profit warning that Home Retail issued in October, which it blamed on uncertainty around Black Friday promotions. Investment banking sources said the company may look attractive to bidders given the sharp fall in its share price during 2015, combined with a robust cash position and a large customer loan book.

At the other end of the mid-cap index, Playtech ended down 8.9% at 775.00 pence after saying it has terminated its agreement to acquire contracts-for-difference broker Plus500 over concerns it will not be able to secure UK Financial Conduct Authority approval before the end of 2015, and later confirmed that its purchase of Ava Trade also has fallen through.

The gambling software company agreed to buy Plus500 in a GBP459 million deal in early June as part of a series of deals to form its new Financials segment, starting with its acquisition of TradeFX in April and its separate deal to acquire Ava Trade for USD105 million. The deals for Plus500 and Ava Trade were expected to complete in September. However, both hit regulatory stumbling blocks.

Shares in Playtech recovered after dropping as much as 14% at the London open to 745.25p, a low it hasn't seen since March 2015. Plus500 ended down 12%.

Outsourcing company Mitie Group ended down 6.2% after it said its pretax profit rose in its financial first half due to restructuring charges booked a year earlier not repeating, but its headline profit was weaker due to tougher conditions for its healthcare business.

Despite this, Investec and Liberum retained Buy and Hold ratings as both brokers appreciated the performance of Mitie's facilities management division, which achieved a 100% contract retention rate, including deals with Rolls-Royce and broadcaster Sky.

Also in the UK corporate calendar on Thursday, Compass Group releases full-year results, and Kingfisher, Intertek and Drax Group issue trading statements, while Babcock International Group publishes half-year results. Shaftesbury and AO World release full-year results, Cineworld Group and Cape publish trading statement, and Record issues half-year results. Greencore, Paragon Group of Companies and Mitchells & Butlers release full-year results.

In the economic calendar on Tuesday, Germany's third-quarter gross domestic product is due at 0700 GMT, while the country's IFO business climate is expected at 0900 GMT. Before that, France's INSEE business climate data are expected at 0745 GMT. In the US, GDP for the third-quarter is due at 1330 GMT, alongside US goods trade balance. The US Redbook index is due at 1355 GMT, while US consumer confidence is expected at 1500 GMT.

By Daniel Ruiz; danielruiz@alliancenews.com

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