Last checked at LONDON (Alliance News) - Stocks in the UK were trading lower midday Monday, weighed down by concerns about growth in China after Chinese Premier Li Keqiang said over the weekend that his government will not "defend to the death" its goal of 7.0% economic growth this year.
Li's remarks came after the Chinese central bank on Friday cut interest rates and its required reserve ratio to help stimulate the country's economy in the wake of weak economic growth data issued earlier last week.
Chris Beauchamp, senior market analyst at IG, said the comments by Li were essentially an admission that the 7.0% growth target is now too optimistic, and investors should adjust themselves to the reality of weaker growth.
This meant that the gains in Asian stock indices were relatively muted on Monday, despite the stimulus measures by the People's Bank of China being announced after the Asian market close on Friday. The Nikkei 225 index in Tokyo closed up 0.7%, while the Hang Seng in Hong Kong ended down 0.2% and the Shanghai Composite up 0.5%.
The FTSE 100 traded down 0.2% at 6,433.24 points, and the FTSE 250 was down 0.3% at 17,192.30. The AIM All-Share was outperforming the larger-cap indexes, trading up 0.1% at 747.96.
The CAC 40 in Paris was down 0.6%, while the DAX 30 in Frankfurt was up 0.1% after better-than-expected Ifo business sentiment surveys.
Germany's business confidence weakened by less than expected in October, as expectations unexpectedly improved, survey results from the Ifo institute showed. The business climate index fell to 108.2, yet the score was above the 107.8 economists had forecast. In September, the reading was 108.5.
The current conditions index, however, dropped to 112.6, which was worse than the 113.5 economists had predicted and the September score of 114.0. The expectations index of the survey rose to 103.8 in October, defying forecasts for a decline to 102.3. In the previous month, the reading was 103.3.
Ahead of the US open, Wall Street futures indicated a lower open. The Dow Jones Industrial Average was pointed down 0.1%, while the S&P 500 and Nasdaq 100 indices both were expected to open down 0.2%.
On the London Stock Exchange, Aberdeen Asset Management led FTSE 100 gainers, up 3.6%. The Financial Times on Sunday said the group has started sounding out potential buyers for the company as the emerging-markets-focused fund manager attempts to stem a recent slump in profitability, its share price and its assets under management.
People familiar with the process said Martin Gilbert, the chief executive of the company, had made informal approaches to a number of rivals in recent months, the newspaper said. Gilbert, who also founded the business, declined to comment to the FT. A spokesman for Aberdeen denied the reports to multiple media outlets on Monday.
WPP was the worst blue-chip performer, down 2.2% despite the advertising and media buying company predicting a strong end to 2015 after seeing revenue rise in its third quarter.
Analysts largely greeted WPP's results positively, with many noting that WPP's results helped show that weak results from rival Publicis Groupe last week remain specific to Publicis and are not indicative of the wider marketing space. Last Thursday the French advertising group slashed its organic growth target for 2015, following flat sales in September.
WPP reconfirmed its outlook for the year, continuing to expect an operating margin improvement of 0.3 margin point at constant currency. For the first nine months, WPP's operating margin was up 0.3 margin point at actual exchange rates, and up 0.5 margin point at constant currency.
However, the market focused on concerns for WPP about the measurement of digital advertising and the economic slowdown in China.
In the FTSE 250, TalkTalk Telecom Group shares were down 9.0% at 233.75 pence, making it the biggest faller in the index. The company hit an intraday low of 231.55p, its lowest price since July 2013. The telecommunications company was still suffering from the cyber attack it faced last week which resulted in the data of its customers being breached.
TalkTalk said over the weekend the volume of financial information of its customers accessed it now expected to be "materially" lower than originally anticipated and said the data breached would not be enough on its own for a criminal group to target its customers.
The Financial Times, however, reported TalkTalk is facing mounting calls to pay compensation amid claims criminals have already started to target its customers. TalkTalk also said it has hired BAE Systems, the defence contractor, to help it in dealing with the aftermath of the hack.
Aerospace and automotive components manufacturer Senior was upgraded to Buy from Hold by Investec as the broker said the company is currently undervalued. Investec said that while the growth story for Senior has paused, the company's programme positions, operational flexibility, consistent cash generation and strong balance sheet are attractive and undervalued at current share price levels. Senior traded up 3.4%.
Europa Oil & Gas was one of the best performers in the AIM All-Share index up 15%. The company said it has had its three prospects offshore Ireland independently valued at USD7.0 billion. The three prospects on the FEL 3/13 licence in the Porcupine basin offshore Ireland has been valued by ERC Equipoise, which placed a non-risked net present value of USD7.00 billion on the prospects and a risked net present value of USD1.10 billion.
Europa currently holds a 15% stake in the licence, but is currently awaiting for Irish government approval to take back a 100% interest in the licence after its partner Kosmos Energy Ireland pulled out earlier this year.
Agricultural bioscience company Plant Impact traded up 11% after it said its pretax loss narrowed in the year to the end of July as it increased its revenue and expanded sales of its Veritas product across the Brazilian soy market.
Plant Impact said its pretax loss in the year to July 31 was GBP249,000, compared to a GBP853,000 loss made a year earlier, as total revenue for the company rose to GBP4.5 million in the year, up from GBP2.5 million. The company said it flagship soybean foliar spray, Veritas, led the revenue increase thanks strong growth in Brazil, with the product now being sold to all sow-growing regions in Brazil.
The technology is now undergoing field tests outside Brazil and technical trials are currently progressing for the company's second and third crop enhancement products for soy.
Still ahead in the economic calendar, US new homes sales are at 1400 GMT, and the Dallas Fed manufacturing business index is at 1430 GMT.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
IN BRIEF: Europa Oil & Gas withdraws from UK offshore licensing round
Europa Oil & Gas (Holdings) PLC - UK and Ireland-focused oil and gas exploration, development and production company - Updates on the company's application for a licence as part of the 33rd UK Offshore Licensing Round that closed in January. Says the North Sea Transition Authority proposes a marriage between Europa and another party for the Licence. But, Europa decides not to accept the proposed marriage and also notifies the NSTA that, if the NSTA subsequently decide to award the Licence, in its entirety to the company as the sole owner, Europa would decline the offer. Europa explains that since its original application various aspects of the operating conditions and the fiscal environment have changed and remain uncertain. This reduces the economic and strategic attractiveness of the licence. As such, Europa believes that its resources are better deployed on its existing assets and looking for new opportunities within its core areas of focus.
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