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LONDON (Alliance News) - UK stocks closed mixed Thursday, with small-caps outperforming their larger peers, as concerns about the outlook for the global economy weighed heavily upon investor sentiment.
Manufacturing data released from China over the past two days has reignited fears that the world's second largest economy is slowing. Following a brief pause in trading for the New Year, Thursday provided traders with the first opportunity to react to this news.
China's manufacturing activity declined in December, a survey by Markit Economics and HSBC revealed Thursday; the headline purchasing managers' index fell to a three-month low of 50.5 in December from 50.8 in November.
The data follows on from a survey by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on Wednesday which revealed that the purchasing managers' index fell to 51 in December from 51.4 in November.
The FTSE 100 closed down 0.5% at 6,717.91, the FTSE 250 snapped an eight-day winning streak, closing down 0.1% at 15,919.09, while the AIM All-Share index closed higher for the eighth consecutive session, up 1% at 858.81.
Meanwhile, in the eurozone, the German and French economies continued to diverge. The French manufacturing sector contracted at a faster rate in December than estimated earlier. The seasonally adjusted PMI for the manufacturing sector dropped to 47 in December from 48.4 in November, hitting the lowest level in seven months. The flash estimates were for a reading of 47.1 in December.
The German manufacturing sector expanded slightly more than initially expected in December, rising to 54.3 from 52.7 in November. Economists had expected a marginally more modest increase to 54.2.
As a whole, the eurozone's manufacturing sector growth picked up further in December, in line with expectations. The headline purchasing managers' index rose for the third month running to post 52.7 in December, unchanged from the flash reading and higher than November's score of 51.6.
The UK's manufacturing recovery remained on track at the end of 2013. The Markit PMI for December showed a small decline to 57.3 from November's 33-month high of 58.1, slipping more than the expected drop to 58. The November score was revised down from 58.4.
In the US, December's Markit PMI came in at 55.0, slightly higher than the preliminary estimate of 54.4 previously released.
Meanwhile, the Institute for Supply Management also released a report Thursday. The report showed a slight slowdown in the pace of manufacturing growth in December. The ISM said its purchasing managers index edged down to 57.0 in December from 57.3 in November, matching economist estimates.
Also from the US, data released by the Labor Department Thursday revealed that jobless claims decreased modestly to 339,000 in the week ended December 28, compared to the previous week's upwardly revised figure of 341,000. While the number of claims fell, economists had expected them to decrease to 334,000 from the 338,000 originally reported in the previous week.
Additionally, the US Commerce Department said that its month-on-month construction spending rose 1.0% in November, outstripping economists' expectations. Forecasts had been for a decrease to 0.6% from 0.9% in September.
In the wake of the US data, the dollar extended its recent gains against the pound. At the London equity market close, the pound trades at USD1.6441.
Wall Street currently trades lower. The S&P 500 is down 0.7%, the Nasdaq Composite is down 0.8%, and the DJIA is down 0.6%.
At the individual UK stock level, FTSE 250-listed Hikma Pharmaceuticals, closing up 6.3%, was amongst the index's biggest risers. The company's share price jumped after UBS upgraded the group to Buy from Neutral, increasing its price target to 1,350.00 pence from 1,050.00p, on optimism surrounding the antibacterial medicine Doxycycline.
"Even assuming a 40% decrease in Doxycycline pricing in 2014, a worsening of the volume growth for the entire Doxycycline market and a significant loss in market shares for Hikma?s Doxycycline, Hikma should still be able to generate USD50 million plus in earnings before interest and taxes in 2014 for Doxycycline alone," Guillame van Renterghem, an analyst at UBS, commented.
Alongside this, UBS believes that the continued weakness in the Japanese Yen could boost second-half EBIT in 2013 by 0.8% to 1%.
At the other end of the spectrum, Ophir Energy, closing down 8.2%, was the biggest loser. The company has now concluded its drilling operations on the Mlinzi Mbali-1 well in Block 7 in Tanzania. The well, which was the first of a series of high impact, high risk wells that Ophir will drill through 2014, did not encounter live hydrocarbons.
In the AIM All-Share index, Kalimantan Gold closed down 39%. The junior exploration company said that it has received a notice of intention from its joint-venture partner Surya Kencana LLC to cease funding and to withdraw from the two firms' copper project in Kalimantan, Indonesia.
In the data calendar Friday, Nationwide housing price figures for the UK are released at 0700 GMT. UK mortgage approvals, consumer credit and PMI construction data are all scheduled for 0930 GMT. In the US, the ISM New York index is released at 1445 GMT, ahead of a speech from out-going Federal Reserve Chairman Ben Bernanke at 1930 GMT.
In the corporate calendar, FTSE 100-listed Next PLC releases its Christmas trading results.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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