LONDON (Alliance News) - Stocks in London were higher on Monday morning, ahead of eurozone Purchasing Managers' Index readings, but FTSE 250-listed defence and aerospace technology company Cobham was taking a hit after issuing a profit warning.
At the other end of the mid-cap index was Petra Diamonds, after saying production in the first quarter of its financial year grew by a third year-on-year and it generated revenue, having not held a diamond sale a year before.
The blue-chip index was up 0.6%, or 43.18 points, at 7.063.65. The FTSE 250 was 0.5% higher at 18,028.29, and the AIM All-Share was up 0.2% at 829.22.
The BATS UK 100 index was 0.7% higher at 11,951.58, the BATS 250 index was up 0.6% at 16,375.81, and the BATS Small Companies was flat at 11,026.28.
Cobham shares were down 15%, by far the worst mid-cap performer. The firm said trading in the third quarter has remained challenging and was behind its expectations, meaning its results for 2016 are set to miss its forecasts. Cobham said its underperformance has been driven by soft trading in its satellite communications and wireless business units and in the Electronic Solutions arm of its Advanced Electronic Solutions unit.
Cobham said demand for maritime satellite communications has been weak, and its wireless business has made slower-than-expected progress in returning to health amid project delays and additional costs in the business due to higher resource requirements.
Petra Diamonds, up 7.7%, said production in the first quarter to the end of September was 1.1 million carats, up 30% from the 842,796 carats it produced a year prior. This was driven by improved grades and additional tailings production from the Kimberley Ekapa mine.
Revenue for the period was USD94.7 million with 745,447 carats sold. Petra did not hold a diamond sale in the first quarter of its prior financial year. The company also completed its second tender following the end of the quarter, making USD66.4 million and selling 574,000 carats of diamonds.
Petra did, however, note four employees were killed at its operations in the first quarter in three unrelated incidents.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.7% and 0.6%, respectively.
In Asia, the Japanese Nikkei 225 index ended up 0.3%. In China, the Shanghai Composite closed 1.2% higher and the Hasg Seng in Hong Kong was up 0.9%. The Hong Kong market reopened on Monday after being shut on Friday due to a typhoon warning.
Highlights in the economic calendar are the PMI October readings for Germany and the eurozone, due at 0830 BST and 0900 BST, respectively. Meanwhile, Markit manufacturing PMI for the US will follow at 1445 BST. There are no PMI readings scheduled for the UK on Monday.
"The euro area manufacturing PMI is expected to remain steady 52.6 while the services PMI is expected to rebound slightly to 52.5 [from 52.2 in September] but remain in a trend of slowing growth, probably driven largely by similar declines in the German data," said Oanda senior market analyst Craig Erlam. Readings above 50 indicate expansion in the sector.
The German manufacturing reading is expected to be 54.2 from 54.3 in September, the services reading at 51.5 compared to 50.9 a month ago, and the composite at 53.2 from 50.8.
Already released, the manufacturing PMI for France came in at 51.3, above expectations of a 50.0 score and the 49.7 reading seen in September. However, the services reading was 52.1 against a score of 53.3 a month ago and economists' estimates of 52.9. The composite came in at 52.2, as expected, from 52.7 in September.
Also ahead, the UK CBI industrial trends survey is at 1100 BST. In the US, the Chicago Federal Reserve national activity index is at 1330 BST. Fed officials William Dudley and Charles Evans make speeches at 1405 BST and 1830 BST, respectively.
Elsewhere on the London Stock Exchange, easyJet was up 3.3%, the best performer in the FTSE 100, after the budget airline stock was upgraded by UBS to Buy from Neutral.
Meanwhile, St James's Place was 1.6% higher after Macquarie lifted the wealth manager to Neutral from Underperform, according to traders.
Royal Bank of Scotland Group was down 0.3%. A consortium comprising private equity firms and the Church of England has been paid at least GBP180.0 million by RBS for backing the bank's aborted attempt to float its Williams & Glyn business on the stock market, the Guardian reported.
RBS scrapped the initial public offering of Williams & Glyn in August, saying it has spent around GBP1.50 billion over seven years trying to spin-off the business but would now seek to sell it instead. RBS has to sell Williams & Glyn by the end of 2017 to meet European Union state aid rules.
By Daniel Ruiz; danielruiz@alliancenews.com
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