Barclays Share News (BARC)

LONDON (Alliance News) - UK stocks continued to erase last week's gains Tuesday, closing lower despite a late rally, after weak Chinese trade data raised more concerns about the Asian giant's growth prospects.

The FTSE 100 closed down 0.5% at 6,342.28 points, the blue-chip index's second consecutive day of losses after a run of eight straight sessions of gains. The FTSE 250 index closed down 0.5% at 16,898.03 points, and the AIM All-Share closed slightly lower at 734.44.

In Europe, the CAC 40 index in Paris ended down 1.0%, and the DAX 30 in Frankfurt closed down 0.9% as well. The euro traded the dollar at USD1.1376 at the European equity close.

In New York at the London close, the Dow Jones Industrial Average, S&P 500 index, and the Nasdaq Composite index all were up 0.1%.

Stocks in London slid lower at the open after weaker-than-expected Chinese import data overnight. A report by China's General Administration of Customs showed imports logged a sharp 17.7% year-on-year contraction in yuan-denominated terms after falling 13.8% a month ago, marking the eleventh straight annual decline in imports. Imports were expected to decline 15%.

Meanwhile, exports slid 1.1% in September, moderating compared to the 5.5% decline seen in August. Economists had forecast exports to drop at a faster pace of 6.3% in September.

The weak data from China weighed on the shares of London-listed miners, as China is the world's biggest consumer of metals. Glencore ended down 3.8% and Anglo American closed down 2.7%. Luxury retailer Burberry Group shares were also hit, due to its exposure to the country, ending down 3.1%.

In commodities, gold was quoted at USD1,165.23 an ounce at the London close, while Brent oil was at USD49.92 a barrel.

Further weighing on investor sentiment were disappointing results from German ZEW economic confidence survey, which was blamed on the Volkswagen emissions scandal. The investor confidence index fell to 1.9 points in October from 12.1 in September. This was the lowest score since October 2014, when it stood at -3.6.

At the same time, current assessment deteriorated in October. The corresponding index fell to 55.2 points from 67.5 in September. The reading was the lowest since March 2015, when the score was 55.1.

"This is the seventh consecutive fall [in the investor confidence index] which leaves the measure teetering on the cusp of a negative reading, denoting pessimism," said IG market analyst Joshua Mahony.

"Unfortunately we have seen little evidence that the eurozone is really returning to strength and despite [quantitative easing] being front loaded, the impact seems to be so minimal that we are already discussing the expansion of the programme after seven months," Mahony added.

In the UK, consumer price inflation turned negative again in September, further supporting the view that UK interest rates are unlikely to be raised any time soon.

Consumer prices dropped 0.1% year-on-year in September, after staying flat in August, the Office for National Statistics reported Tuesday. Economists had expected prices to remain flat. Deflation was last seen in April, when prices edged down 0.1%. The annual inflation figure has remained in the range of -0.1% to +0.1% since February.

The Bank of England last week said inflation was likely to remain close to zero before picking up around the turn of the year and will likely remain below 1% until Spring 2016.

IHS Global Insight Economist Howard Archer commented that deflation is likely to prove brief and marginal, and it is highly unlikely that UK consumers will be tempted to start delaying purchases in anticipation of falling prices.

The pound reacted negatively following the data and remained weak against the dollar for the rest of the session. At the equities close the pound traded the dollar at USD1.5242.

On the corporate front, SABMiller shares were by far the best performers in the FTSE 100 up 8.6% to 3,933.79 pence. The Anglo-South African brewer agreed to be taken over by Belgian-American brewer Anheuser-Busch InBev to create a global beer giant.

AB InBev lifted its offer for Anglo-South African SABMiller to GBP44 per share, worth GBP71.28 billion in total, following the rejection of numerous prior offers, and its smaller rival finally said it would be willing to recommend a bid at that price to its shareholders.

If the deal goes ahead, it will be one of the largest merger and acquisitions of all time and will create a company with a market capitalisation of around USD280.0 billion. AB InBev and SABMiller currently are the world's largest and second largest brewers in the world, respectively.

Shares in Irish drugmaker Shire rose 1.2% after it revealed that the US Food and Drug Administration has granted cinryze a fast track designation for investigation in the treatment of antibody mediated rejection in patients receiving kidney transplants.

At the other end of the index, Royal Mail closed as the worst blue-chip performer, down 5.0% at 448.39p after the UK government said it has sold the majority of its 14% stake in Royal Mail for around GBP591.0 million under an accelerated bookbuilding process announced the previous day.

The government sold a 13% stake in Royal Mail, comprising around 130.0 million shares, at a placing price of 455.0p per share. The remaining 1% stake, equivalent to about 10.0 million shares, will be "gifted" to Royal Mail employees in the UK, marking the government's final disposal of shares.

Barclays said it is yet to conclude the process of appointing a new chief executive, amid press reports that the banking group has already chosen former JPMorgan investment banker Jes Staley for the role.

"The process of appointing a new group chief executive officer has not yet concluded, and Barclays will provide a further update once that is complete," Barclays said in a statement which made direct reference to Staley.

Chairman John McFarlane, who has been acting in an executive capacity since ousting retail banker Antony Jenkins from the CEO role in July, has previously suggested that Barclays's new leader would require serious investment banking experience. Barclays closed down 2.2%.

Michael Page International was the best performers in the FTSE 250, up 3.9%. The recruitment consultant reported a rise in gross profit for the third quarter of 2015, although its performance was damped by exchange rate volatility, and it reiterated its full-year expectations barring any further movement in currencies.

The company also announced that Non-Executive Chairman Robin Buchanan plans to step down, having held the position since December 2011.

Buchanan will remain as non-executive chairman whilst a successor is identified, and the date of his retirement will be confirmed "in due course", Michael Page said.

Bellway shares ended up 3.6% after the housebuilder said it should be able to grow volumes by up to 10% in its current financial year, as it reported a 44% jump in pretax profit to GBP354.2 million in the year ended July 31 and raised its dividend to 77.0 pence from 52.0p.

In the economic calendar for Wednesday, the Chinese consumer and producer price index is at 0230 BST, French inflation data are at 0745 BST, before UK unemployment and wage data at 0930 BST and eurozone industrial production at 1000 BST. In the afternoon, US retail sales are at 1330 BST alongside producer price index.

In the UK corporate calendar, the FTSE 100-listed investment supermarket Hargreaves Lansdown releases an interim management statement, while blue-chip precious metals miner Fresnillo provides third quarter production results. There also are trading statements from Domino's Pizza Group and pub company Marston's, while online, catalogue and stores retailer N Brown Group releases half-year results.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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