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(Alliance News) -Â The FTSE 100 was posting moderate losses at midday on Monday in London with sentiment cautious as countries in Europe eased their lockdowns and the US upped its attacks on China over the Covid-19 outbreak.
The FTSE 100 index was down 17.87 points, or 0.3%, at 5,745.19. The FTSE 250 was down 225.21 points, or 1.4%, at 15,923.13, and the AIM All-Share was down 0.1% at 796.51.
The Cboe UK 100 was down 0.2% at 9,720.16, the Cboe UK 250 down 1.3% at 13,698.92, and the Cboe UK Small Companies down 1.2% at 8,898.86.
"European markets have kicked off the week on a relatively bearish tone, although early declines in the futures market have been largely recovered to lead the FTSE 100 back towards parity on the day," said Joshua Mahony, senior market analyst at IG.
"Today's FTSE 100 recovery stands in stark contract to the huge declines evident throughout mainland European markets this morning," Mahony added. "Coming off the back of a period of optimism at the thought of an economic reopening throughout Europe, we are now seeing fears arise over the potential market reaction if such a move ultimately leads to a second wave and subsequent lockdown."
In European equities on Monday, the CAC 40 in Paris was down 3.7%, while the DAX 30 in Frankfurt was down 3.1%. Markets in France and Germany were closed on Friday for Labour Day, a day which saw London's FTSE 100 shed 2.3%.
Italians will be free to stroll and visit relatives for the first time in nine weeks on Monday as Europe's hardest-hit country eases back the world's longest nationwide coronavirus lockdown.
Restaurants that have managed to survive Italy's most disastrous crisis in generations will reopen for takeaway service. But bars and even ice cream parlours will remain shut. The use of public transport will be discouraged, and everyone will have to wear masks in indoor public spaces.
Germany also continued the easing of its restrictions at the start of the week, with schools in some areas expected to reopen, while Slovenia and Poland will allow some businesses and public spaces to operate again. France has said it will partially lift its lockdown on May 11.
Amid weeks of economically bruising lockdowns, data on Monday showed the eurozone manufacturing sector slumped in April.
The eurozone manufacturing purchasing managers' index reading came in at 33.4 in April, down sharply from 44.5 registered in March. The score missed the market consensus estimate of 33.6.
The figure was well below the 50.0 mark which separates expansion from contraction.
IHS Markit said lockdown measures imposed by European governments heavily dented demand and production.
The euro was quoted at USD1.0940 on Monday, soft from USD1.0955 late Friday.
The pound was quoted at USD1.2421 Monday morning, down from USD1.2593 at the London equities close Friday. Against the yen, the dollar was quoted at JPY106.79, down from JPY107.16.
Also knocking sentiment at the start of the week, the US ratcheted up its attacks on China over the Covid-19 outbreak.
US Secretary of State Mike Pompeo on Sunday said "enormous evidence" showed the new coronavirus originated in a lab in China, further fuelling tensions with Beijing over its handling of the outbreak.
US President Donald Trump, increasingly critical of China's management of the first outbreak in the city of Wuhan in December, claims to have proof it started in a Chinese laboratory. But Pompeo went further than Trump, citing "enormous" evidence that the virus originated in a Wuhan lab. He did not however present evidence to back up his claim.
"I think the whole world can see now, remember, China has a history of infecting the world and running substandard laboratories," he said.
In New York, stocks are pointed to a slide at the open. The Dow Jones is called down 1.2%, the S&P 500 down 1.0% and the Nasdaq down 0.8%.
Set to drag on Wall Street are airline stocks after billionaire investor Warren Buffet said his company sold all its stakes in four major US airlines last month as the pandemic clobbered the travel industry.
"It turns out I was wrong," he said of his acquisitions of 10% stakes in American Airlines Group, Delta Air Lines, Southwest Airlines and United Airlines Holdings.
Berkshire Hathaway had paid USD7 billion to USD8 billion, and "we did not take out anything like that," he said. Between the purchases that took place over months, and the sale, "the airlines business I think changed in a very major way" and could no longer meet Berkshire criteria for profitability, he said.
Buffett's announcement may further hurt airlines already pushed to the brink by coronavirus lockdown measures, now looking to the US government for USD25 billion in relief funds.
American Airlines shares were down 7.2% pre-market, Delta down 9.1%, Southwest Airlines down 7.7% and United Airlines Holdings down 9.1%.
IG's Mahony commented: "Known for his long-term thinking, the decision to dump shares associated with global travel highlights just how long and difficult this struggle could be for the sector. From a travel perspective, this virus could see heightened demand for domestic holidays, with global travel unlikely to see any semblance of normality until a vaccine or cure is found."
In London, British Airways parent International Consolidated Airlines was down 3.8% at midday. easyJet was down 8.2% and Ryanair down 3.9%.
Also among the fallers in the FTSE 100 was Rolls-Royce, down 8.3% after the Financial Times reported the firm is considering cutting up to 8,000 jobs as part of a restructuring plan to reduce its 52,000-person workforce by 15% in response to Covid-19 crisis.
The newspaper cited "several people inside the company" saying senior executives of the jet engine maker have begun work on the restructuring plan. The move is in response to production cutbacks by major customers Airbus and Boeing, themselves struggling with empty skies as a result of government travel bans to contain the spread of the new coronavirus.
Towards the top of the FTSE 100 index in London on Monday was Rentokil Initial, up 4.4% after Morgan Stanley initiated the pest control and hygiene firm with an Overweight rating.
Boosted by a rating upgrade in the FTSE 250 was AG Barr, the stock up 3.3% after Liberum raised the soft drinks maker to Buy from Hold.
In commodities, Brent oil was quoted at USD25.62 a barrel Monday, lower than USD26.68 late Friday. The precious metal was quoted at USD1,709.93 an ounce midday, up from USD1,685.70 at the London close Friday.
By Lucy Heming;Â lucyheming@alliancenews.com
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