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(Alliance News) - London stocks underperformed on Monday as equities in mainland Europe and the US rose on easing US-China trade worries.
The blue-chip FTSE 100 ended in the red, as oil stocks ended the day on a soft note and Fresnillo tracked the price of gold lower.
The FTSE 100 index closed down 18.00 points, or 0.2%, at 7,408.21. The FTSE 250 ended down 33.69 points, or 0.2%, at 19,937.26, and the AIM All-Share closed just 0.48 of a point lower, down 0.1%, at 872.22.
The Cboe UK 100 ended flat at 12,595.58, with the Cboe UK 250 also closing the session unchanged, at 17,833.86. The Cboe Small Companies ended down 0.1% at 10,891.37.
In European equities on Monday, the CAC 40 in Paris ended up 0.5%, while the DAX 30 in Frankfurt ended 0.3% higher.
"Stocks are largely positive as we approach the close as traders are a little less fearful about the US-China trade situation. Peter Navarro, US trade advisor, said the speculation the White House is considering delisting Chinese companies from US stock exchanges was 'fake news'...The announcement from Navarro has encouraged traders to pick-up stocks as this puts the US-China trade relationship back on positive footing," said David Madden at CMC Markets.
Stocks in New York were higher at the London equities close, with the Dow Jones, S&P 500 index and the Nasdaq Composite all trading 0.4% higher.
The pound was soft, quoted at USD1.2297 at the London equities close Monday, compared to USD1.2310 at the close on Friday.
Official data on Monday showed UK gross domestic product contracted sequentially in the second quarter of 2019.
UK GDP fell 0.2% in the three months to June on the quarter before, in line with the previous estimate and with market consensus according to FXStreet. In the second quarter, production fell by 1.8% quarter-on-quarter, the steepest fall since 2012. This was driven by a 2.8% fall in manufacturing output.
In political news, the EU will receive detailed papers from the UK government this week as talks to negotiate a deal ramp up ahead of the looming Brexit deadline on October 31.
UK Prime Minister Boris Johnson has pushed for the Northern Irish backstop – the pledge to keep the UK aligned with EU customs rules to prevent a hard border if no exit deal can be agreed – to be removed "whole and entire" before a Withdrawal Agreement can be signed off.
Brexit Secretary Stephen Barclay and Brussels' chief negotiator Michel Barnier met on Friday to progress discussions on the backstop. The government is now preparing to advance those talks this week after the Conservative Party conference in Manchester has finished.
The euro, meanwhile, stood at USD1.0902 at the European equities close Monday, down from USD1.0954 at the same time on Friday.
Gold was quoted at USD1,470.11 an ounce at the London equities close Monday against USD1,491.45 at the close on Friday.
"The [gold] price has slipped through the support levels of mid-September, and with investor positioning already heavily-long the yellow metal, the fuel for continued gains appears lacking. Gold's best hope remains a revival of trade wars, but hopes are still high ahead of October that the two sides can make at least some progress," said Chris Beauchamp, chief market analyst at IG.
In step with the lower price of gold, Fresnillo ended the session down 2.8%.
In other commodities, Brent oil was quoted at USD60.20 a barrel at the London equities close Monday from USD62.36 late Friday.
"The big fear for the oil market is a serious decline in Chinese growth and this morning's China manufacturing PMI numbers fed that fear. Though the data was less negative than expected and showed that the decline seen in the last few months has reversed slightly in September, nevertheless manufacturing in the country is still teetering on the verge of contraction which doesn't bode well for the country's oil demand," said Fiona Cincotta, senior market analyst at City Index.
London's oil stocks finished the session on a weaker note in the wake of the lower oil price, with Royal Dutch Shell 'A' shares closing down 1.0% and 'B' shares down 0.6%. BP ended down 0.7%.
Additionally, Shell on Monday said it expects to see a "strong trading and optimisation performance" for the third quarter.
In the Upstream oil division, production is expected to be between 2.6 million and 2.65 million barrels of oil per day. Shell said that during the third quarter there has been additional oil-well write-offs in the range of USD250 million to USD350 million, when compared to the third quarter of 2018 - for which no cash impact is expected.
On the corporate front, Shell said third quarter earnings - excluding identified items - are expected to include a net charge of between USD700 to USD850 million. The figure excludes the hit of currency exchange rate effects.
Towards the bottom of the FTSE 100 at the start of the week was Whitbread, the Premier Inn owner closing down 3.3% after Barclays cut the stock to Equal Weight from Overweight.
Meanwhile, DS Smith ended 2.1% higher after the UK Competition & Markets Authority said it would not refer the buyout of its flexible plastic packaging division by Liqui-Box Inc to a Phase Two investigation.
The GBP450 million takeover deal was first announced in March, and in May the UK monopoly regulator said it would probe the proposed acquisition. In late July, Liqui-Box offered undertakings to the CMA, following which the regulator said there were "reasonable grounds" for the undertakings to remedy the lessening of competition to be accepted.
The undertakings proposed by Liqui-Box comprised the divestment of its Bag-in-Box business, which includes manufacturing and assembly equipment at its Wythenshawe facility in Manchester, and a list of Liqui-box's UK BiB customers to be transferred to the buyer.
In the FTSE 250, HomeServe closed up 2.0% after RBC raised the emergency home repairs business to Outperform from Sector Perform.
On AIM, shares in Burford closed up 4.0% after the company said an investigation has identified evidence of share price manipulation in the form of spoofing and layering surrounding the Muddy Waters report.
Spoofing and layering are types of market manipulation where a trader uses fake orders to give a false impression of the actual supply and demand of shares.
Short seller Muddy Waters Capital LLC in August targeted litigation finance company Burford, calling it "a poor business masquerading as a great one" and "arguably insolvent". Joshua Mitts, an "independent expert" was commissioned by Burford to make a report into share price manipulation on August 6 and 7.
"I conclude that the decline in the price of Burford's stock on 6 and 7 August was driven by large waves of sell-side order cancellations. During five one-minute periods on 6 August, Burford's stock fell 6.5%, or over GBP170 million," he said.
Burford is seeking judicial approval to get more information on Burford share orders from the London Stock Exchange.
In the UK corporate calendar on Tuesday, there are annual results from plumbing and heating firm Ferguson while sausage roll maker Greggs puts out a trading statement.
In the economic calendar on Tuesday, Japanese unemployment is at 0030 BST while UK Nationwide housing prices are at 0700 BST. Later in the morning, there are manufacturing purchasing managers' indexes from France, Germany, the eurozone and the UK at 0850 BST, 0855 BST, 0900 BST and 0930 BST respectively.
Eurozone inflation is then at 1000 BST, with a US Markit manufacturing PMI at 1445 BST.
By Lucy Heming; lucyheming@alliancenews.com
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