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(Alliance News) - Stocks in London opened Thursday's session lower following some disappointing data from China overnight, though Burberry was defying a slumping FTSE 100 to post solid gains as it delivered a resilient performance despite political protests in key market Hong Kong.
The FTSE 100 was 17.37 points lower, or 0.2%, at 7,333.84 early Thursday. The FTSE 250 was down 19.31 points, or 0.1%, at 20,270.47, and the AIM All-Share was up 0.1% at 885.96.
The Cboe UK 100 index was down 0.3% at 12,429.93. The Cboe UK 250 was down 0.1% at 18,194.45, and the Cboe UK Small Companies was flat at 11,260.77.
In European equities, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt 0.2% lower in early trade.
"Some weak economic data releases overnight and lower optimism regarding a US-China 'phase one' trade deal weighed on risk sentiment," Lloyds Banking explained.
"China's October retail sales, industrial production and fixed asset investment all missed estimates, as did Japanese Q3 GDP and Australian labour market data," Lloyds added. "However, Germany avoided a recession as we expected."
In Asia on Thursday, the Japanese Nikkei 225 index closed down 0.8%. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong closed down 1.0%. The Hang Seng is nearly 5% lower since the week began.
In China, industrial production growth slowed by more than expected to 4.7% in October on the year prior.
Data from the Chinese National Bureau of Statistics on Thursday showed industrial output expansion decelerated from the 5.8% annual growth recorded in September. The October print also disappointed the 5.4% October growth forecast by economists, according to the consensus cited by FX Street.
Pro-democracy protesters challenging China's rule of Hong Kong on Thursday choked the city for a fourth straight working day, firing arrows at police, barricading roads and disrupting transport links, as schools and businesses closed.
The territory has entered its sixth month of protests, which have morphed from mass rallies into a "blossom everywhere" campaign of debilitating disruption by groups of black-clad, mainly student, demonstrators.
Violence has intensified this week across the financial hub, leaving several people in critical condition, stretching police resources and hammering the transport network.
Despite the turmoil in one of its top consumer markets, London-listed fashion house Burberry said it was pleased with its performance in the first half of its financial year.
The stock was up 8.4% Thursday morning, the top performer in the FTSE 100 in opening trade.
Revenue was up 5% in the six months to September 28 at GBP1.28 billion, with comparable store sales rising 4% - made up of first quarter comparable sales growing 4% and this rate accelerating to 5% in the second quarter. Pretax profit grew to GBP192.6 million from GBP174.1 million.
Asia Pacific revenue increased by a mid-single digit percentage, with mainland China up mid-teens, South Korea up high-single digits and Japan up mid-single digits. Hong Kong, however, declined by double-digits.
Europe, Middle East, India and Africa grew by a mid-single digit percentage and the Americas by low-single digits, Burberry said.
The company maintained its guidance for "broadly stable top-line and adjusted operating margin", despite pressure on margins from disruptions in Hong Kong.
Burberry now expects its gross margin to be down around 150 basis points, previously a 100 basis point decline, reflecting mix and "the disruptions in higher margin market Hong Kong".
Meanwhile, gold miner Fresnillo was down 2.9%. Goldman Sachs cut its rating on the stock to Sell from Neutral.
In the FTSE 250, UK retailer Card Factory was down 1.9% as it reported a fall in like-for-like sales in the third quarter.
Card Factory said like-for-like sales in the third quarter fell 0.3%, while sales were up 0.9% in the nine months to October 31. Total sales in the nine months grew 5.0%, a pace the company described as "robust".
Card Factory stores saw an increase in average spend, following targeted improvements to its range of card and non-card products, but like-for-like sales were hit by weaker footfall in the quarter and declined 0.4%.
"Our quality-value proposition and new product ranges give us confidence that we are well positioned to deliver a good performance in our key Q4 trading period. The board anticipates profits for the full year to be broadly in line with its previous expectations," said Chief Executive Karen Hubbard.
Transport operator FirstGroup, down 5.1% and the worst mid-cap performer, reported a wider interim loss on an impairment charge.
Revenue for the first half grew to GBP3.53 billion from GBP3.30 billion a year ago, but its loss widened to GBP187.1 million from GBP4.6 million, largely due to a GBP124.4 million impairment of its Greyhound operations.
"We have taken a number of important steps since our announcement in May including the sale process for Greyhound, future UK Bus pension scheme funding and the strengthening of our Rail portfolio. We are intent on realising value for shareholders and will actively manage our entire portfolio by all appropriate means. We look forward to reporting on further progress in the second half," said Chief Executive Matthew Gregory.
The economic events calendar on Thursday has UK retail sales at 0930 GMT and eurozone GDP data at 1000 GMT. In the afternoon, there are US producer prices at 1330 GMT and US Federal Reserve Chair Jerome Powell testifies to Congress at 1500 GMT.
FXStreet consensus sees UK retail sales growing 3.7% year-on-year in October, faster than the 3.1% rise recorded in September.
Already out, data showed Germany managed to stave off a recession in the third quarter as gross domestic product edged up. GDP in the three months to September 30 grew 0.1% sequentially. This followed a revised 0.2% contraction the previous quarter.
If Germany's economy had shrunk again in the third quarter, the country would have entered a technical recession. FXStreet consensus had seen a 0.1% quarter-on-quarter fall in GDP in the third quarter.
"We had a sense that a small upside surprise was coming in today's report given the solid September trade data, and upward revisions to the manufacturing numbers towards the end of Q3," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
Vistesen continued: "So, no recession, but most definitely a very weak economy. In some sense, this is the "worst" of both worlds for markets. Today's data confirm that the German economy has now stalled, but the headlines are probably not dire enough to prompt an immediate and aggressive fiscal response from Berlin."
By Lucy Heming; lucyheming@alliancenews.com
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