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(Alliance News) -Â London stocks on Friday were heading for a downbeat end to both the week and the month, with weak economic data out of Europe doing little to soothe worries over impact of virus restrictions.
The FTSE 100 index was down 56.46 points, or 0.9%, at 6,469.69 on Friday. The FTSE 250 index fell 88.29 points, or 0.4%, to 20,279.96. The AIM All-Share index lost 0.9% at 1,161.93.
The Cboe UK 100 index was down 0.8% at 643.57. The Cboe 250 was down 0.4% at 17,779.82 and the Cboe Small Companies down 0.1% at 12,102.97.
"Global market sentiment is becoming increasingly mixed at the end of the first trading month of the year as investors remain torn between hopes of a stimulus-fuelled recovery and delays in vaccine rollout, especially in Europe where some countries are even threatening big pharma (AstraZeneca) with possible legal actions," said Pierre Veyret, technical analyst at ActivTrades.
Economic data out of Europe did little to reassure, showing the recovery slowed sharply at the end of 2020.
German gross domestic product in the final three months of 2020 grew just 0.1% on the previous quarter, though this beat expectations, according to FXStreet, for a flat reading. This follows 8.5% growth in the third quarter. Destatis said the German economy declined 5.0% for 2020 as a whole.
In France, meanwhile, GDP in volume terms fell back by 1.3% after rising by 18.5% in the third quarter of 2020. The loss of activity during the fourth quarter of 2020 was caused by the lockdown in effect from the end of October to mid-December and by curfews, Insee said. Nevertheless, the total loss of activity was much more moderate than during the first lockdown between March and May 2020.
For the whole of 2020, the French economy contracted 8.3%.
In mainland Europe early Friday afternoon, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.9%. The euro traded at USD1.2136 on Friday, firm on USD1.2125 late Thursday.
Sterling was quoted at USD1.3705 on Friday, lower than USD1.3725 at the London equities close on Thursday. Against the yen, the dollar was quoted at JPY104.76, up from JPY104.30.
Wall Street is set for a lower open on Friday, with the Dow Jones called down 0.9%, the S&P 500 down 1.0%, and the Nasdaq Composite down 1.2%.
ActivTrades's Veyret noted concerns about volatile trading activity by retail investors in the US.
"The strong bearish wind hit US markets first, following the decision by some brokerage firms to restrict trading on highly volatile shares like GameStop Corp and AMC Entertainment - that have been strongly sustained by an army of retail traders against Wall Street giants - in an attempt to bring more stabilization to prices," he said.
GameStop shares closed down 44% at USD193.60 in New York on Thursday, but almost doubled again in pre-market trade Friday to USD351.20. AMC Entertainment shares were up 49% in the pre-market.
Amateur investors, organising via the WallStreetBets forum on online platform Reddit, have been targeting heavily shorted equities and putting hedge funds under pressure. GameStop's recent share price surge puts pressure on short sellers to make purchases to "cover" their bets to avoid steeper losses in what is known as a "short squeeze".
Robinhood and other trading platforms on Thursday banned the buying of shares in US video game shop chain GameStop and other beaten-down companies. After markets closed, though, Robinhood said the ban was temporary and would be partially lifted on Friday.
In London, Barratt Developments fell 3.1% Friday morning, the worst performer in the FTSE 100, after Berenberg cut the housebuilder to Hold from Buy.
Gold and silver miner Fresnillo rose 1.2% and Hochschild Mining in the FTSE 250 rose 6.2%.
Fresnillo and Hochschild Mining closed up 6.4% and 8.5% respectively on Thursday as WallStreetBets investors were targeting the precious metals sector. According to posts on Reddit, it is another heavily-shorted area. A WSB post circulating on Twitter called the silver bullion market "one of the most manipulated on earth", saying it should be at USD1,000 an ounce and "a squeeze would destroy banks".
Gold was quoted at USD1,859.15 an ounce on Friday, firm on USD1,856.61 on Thursday. Spot silver was trading at USD27.11 an ounce, up on USD26.44 late Thursday in London and having climbed from USD25.38 on Wednesday.
In other commodities, Brent oil was flat at USD55.82 a barrel on Friday from USD55.80 late Thursday.
Back on the LSE, Marston's shares shot up 20% to 89.6 pence after confirmed it received an unsolicited non-binding takeover offer from Platinum Equity Advisors.
"The board will evaluate the proposal with its advisers and a further announcement will be made in due course. There can be no certainty that any firm offer will be made for the company, nor as to the terms on which any firm offer might be made," the pub operator cautioned.
boohoo rose 2.3% after confirming it is in exclusive discussions with the administrators of Philip Green's Arcadia high-street empire to buy Dorothy Perkins, Wallis and Burton.
"These discussions may or may not result in agreement of a transaction. A further announcement will be made when appropriate," boohoo added.
The acknowledgement came after Sky News revealed on Thursday that talks were ongoing between the company and administrators. It caps a week of online businesses snapping up their older high-street rivals.
On Monday, Boohoo said that it had agreed a GBP55 million deal to buy the brand and website of Debenhams - which traces its history back to 1778 - but will not take over the company's high street department stores, which look set to close.
The same day, fellow online-only retailer ASOS confirmed it is in exclusive discussions with Arcadia's administrators over the acquisition of the Topshop, Topman, Miss Selfridge and HIIT brands. ASOS shares were down 5.0% on Friday.
Lookers shares were trading a sharp 92% higher at 40.28p as the stock resumed trading after publishing its interim results. For the six months ended June 30, the car dealership chain posted a GBP50.0 million pretax loss, versus a GBP19.6 million profit a year before.
Revenue fell 40% to GBP1.56 billion from GBP2.61 billion, which Lookers said reflected "the impact of Covid-19 and the closure of a large part of the group's business for a significant period".
By Lucy Heming;Â lucyheming@alliancenews.com
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