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LONDON (Alliance News) - UK shares are mixed Monday mid-morning but are putting in a better performance than other European indices, while Chinese stocks were sold off on Monday after disappointing manufacturing Purchasing Manager's Index data reported on Friday.
The FTSE 100 is up 0.1% at 6,583.61, the FTSE 250 is down 0.3% at 17,442.76 and the AIM All-Share is down 0.3% at 752.45. In Europe, the CAC 40 is down 1.0% and the DAX 30 in Frankfurt is down 0.9%.
The Shanghai Composite fell sharply Monday, down 8.5%, its worst performance in around three weeks. Meanwhile, in Hong Kong, the Hang Seng closed down 3.1%.
"Much of the blame was attributed to that 13-month low manufacturing Purchasing Manager's Index figure last Friday, with investors still spooked by the continual softening of the Chinese economic landscape," writes Spreadex analyst Connor Campbell.
"Whilst the country?s government have proved to be more than willing to intervene with the market weakness, this latest dramatic fall has worryingly taken place after the supposedly stability-inducing measures of the past fortnight," the analyst says.
The manufacturing PMI data reported on Friday was at 48.2, well shy of forecasts for a score of 49.7, down sharply from 49.4 in June.
Meanwhile, profits earned by Chinese industrial enterprises increased in June, figures from the National Bureau of Statistics showed Monday. Industrial profits rose 0.3% year-over-year to CNY588.57 billion in June following a 0.6% rise in the preceding month.
The agency said the slowdown in industrial profit growth for the month was impacted by a decline in industrial producer prices, higher unit costs and tough comparisons with the year-ago period, when profits surged up 17.9%. During the first six months of the year, total industrial profits declined by 0.7% as compared to the corresponding period last year.
Also in the Asian trading session, the Japanese Nikkei 225 finished down 1.0%.
Things were more positive on the European economic-data front. Germany's business confidence improved more-than-expected in July, reports said, citing data from the Munich-based Ifo Institute on Monday. The Ifo Business Climate Index rose to 108 in July, well above the 107.5 score economists had forecast. In June, the reading dropped to a four-month low of 107.4.
The current conditions index of the survey climbed to 113.9, defying expectations for a marginal drop to 113. In June, the score eased to 113.1, which was the first fall in four months. The expectations index of the survey rose to 102.4, while it was expected to hold steady at its June reading of 102. The increase halted the falling trend seen in the previous three months.
The euro jumped to USD1,1113 following the data and is now at USD1,1068. The eurozone currency dropped recently below the USD1.1 mark, touching USD1,0806 last Monday.
Meanwhile, Greece's talks with its creditors over a new bailout package will be delayed until Tuesday "for technical reasons" and are "neither political nor diplomatic" in nature, a finance ministry official says.
The meetings with representatives from the European Commission, European Central Bank, International Monetary Fund, and possibly the European Stability Mechanism, were supposed to have started on Monday. The finance ministry official, who spoke on condition of anonymity, said negotiations at the technical level will start on Tuesday, adding that the mission chiefs will arrive in Athens with a delay of "one or two days" due to technical reasons."
On the London Stock Exchange, gold miners Randgold Resources and Fresnillo are up 2.5% and 1.8%, respectively, benefiting from a rise in gold prices Monday. The yellow metal is at USD1,103 Monday morning. However, it is still at around five-year lows.
Mining peers BHP Billiton, up 2.0%, Anglo American, up 1.3%, Rio Tinto, up 1.1%, and Glencore, up 0.6%, are rebounding from last week's losses.
However, FTSE 250-listed Lonmin is down 5.1% at 59.20 pence after being downgraded by HSBC to Hold from Buy, cutting its price target to 82p from 222p. Morgan Stanley also cut Lonmin to Underweight from Equal-Weight, with its price target lowered to 95p from 137p.
Outside mining stocks, Reckitt Benckiser is up 2.8%. The consumer goods company, which makes products including cleaning spray Cillit Bang, Nurofen painkillers and Durex condoms, on Monday said it has upgraded its like-for-like revenue growth target for the full year after its pretax profit rose in the first half thanks to a solid performance across the business.
Net revenue for the company hit GBP4.36 billion in the half, up from GBP4.332 billion last year, driven by good results across its geographical operations, aided by a favourable flu season for the company. Reckitt is now focused solely on consumer health and hygiene products, having spun off its pharmaceuticals business into FTSE 250-listed Indivior last year. Like-for-like revenue growth in the half, at constant currencies, was 5%.
Royal Dutch Shell 'A' and 'B' shares are up 0.5% and 0.6%, respectively. BG Group said the Brazilian competition authority has cleared the company's proposed mega-merger with Royal Dutch Shell. The authority had already given initial approval earlier in July before formally clearing the deal after an appeal period ended. The clearance is the first of five needed by the pair, as BG and Shell await approval from Australia, China and the European Union. BG did not state the fifth approval that it requires. BG shares are up 0.2%.
Merlin Entertainments shares are down 3.5%. The attractions and theme park operator said that while it still anticipates its results for the first half of 2015 will be in line with its previous expectations, its results for the full year in its theme parks business are set to take a hit from the temporary closure of its Alton Towers theme park in June, the suspension of UK theme park marketing, and temporary ride closures.
Pearson is down 2.3%. The publishing and education company on Saturday confirmed it is in discussions with The Economist Group board and trustees regarding the potential sale of its 50% share in the group, which may be worth about GBP400 million. There is no certainty that this process will lead to a transaction, but Pearson noted that it will make further announcements if and when appropriate.
Last week, Pearson announced that it agreed to sell the Financial Times Group to the Japanese media company Nikkei Inc for GBP844 million in cash. The deal is expected to close during the fourth quarter of this year.
Bwin.Party Digital Entertainment is up 1.2%. AIM-listed GVC Holdings made an increased takeover bid for the FTSE 250 online gaming company, having previously seen its advanced spurned in favour of a rival offer from 888 Holdings. Earlier this month, Bwin.Party turned down GVC's first offer in favour of the 888 bid, despite it valuing the company for less. Bwin.Party said it had sided with the 888 offer due to the higher execution risks involved in the GVC offer, which had been backed by Canada's Amaya Gaming. GVC's new offer has the backing of New York hedge fund Cerberus Capital Management.
On the red side in the mid-cap index, Fidelity China Special Situations is down 7.5%, taking a hit after the slump in Chinese stocks.
Still in the economic calendar, US durable goods orders data is expected at 1330 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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