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(Alliance News) - London stocks continued to trade lower, but were avoiding the bruising losses seen in Asia overnight, as China shut down travel to and from another city in a bid to contain the spread of coronavirus.
Focus in Europe lies with the latest European Central Bank monetary policy decision due shortly.
The FTSE 100 index was down 17.47 points, or 0.2%, at 7,554.45. The FTSE 250 was down 93.32 points, or 0.4%, at 21,669.66, and the AIM All-Share was down 0.3% at 965.24.
The Cboe UK 100 was down 0.1% at 12,803.04, the Cboe UK 250 was down 0.4% at 19,545.66, and the Cboe Small Companies up 0.2% at 12,469.90.
In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 30 in Frankfurt was down 0.3%.
"We're seeing a slightly softer start to trading on Thursday, much more moderate than the losses seen in parts of Asia ahead of the Chinese New Year," said Craig Erlam at Oanda.
"The outbreak of the coronavirus has come at the worst possible time in China, just as hundreds of millions of people prepare to travel across the country and join their families for the New Year," Erlam continued. "It was therefore important for Beijing to act rapidly and drastically in order to both contain the virus and offer comfort that we are not seeing a repeat of the SARS fiasco 17 years ago."
To try and curb the spread, China put a second city on lock-down on Thursday.
The train station in Huanggang, which has a population of 7.5 million and is 70 kilometres from Wuhan, will be suspended until further notice from midnight. All vehicles will be checked, and bars and cinemas will be closed, said city authorities.
This followed authorities in Wuhan, a major transport hub and the centre of the outbreak, earlier in the day banning trains and planes from leaving the city and said residents should not leave "without a special reason".
More than 570 people have been infected with the virus across China – with most cases found in Wuhan, where a seafood market that illegally sold wild animals has been identified as the epicentre of the outbreak. The coronavirus has caused alarm because of its similarity to severe acute respiratory syndrome, or SARS, which killed nearly 650 people across mainland China and Hong Kong in 2002 and 2003.
"The efforts did little to reassure investors though, who fled Chinese stocks ahead of the holiday, during which exchanges will be closed for more than a week. That's to be expected though, a lot can happen in that time, during which investors could be heavily exposed. A little caution seems quite sensible at times like these," said Erlam.
The Shanghai Composite shed 2.8% on Thursday and the Hang Seng index 1.5%. The Shanghai market is closed on Friday and most of next week for the Chinese New Year holiday, while Hong Kong is open on Friday but closed on Monday and Tuesday next week.
In Frankfurt on Thursday, the European Central Bank's latest monetary policy decision is due at 1245 GMT. This will be followed by a press conference with ECB President Christine Lagarde at 1330 GMT.
"No policy changes are expected at today’s ECB meeting. The ECB appears to be satisfied with the current path of inflation. And since data have improved somewhat in recent weeks, this should support their confidence that Eurozone growth is stabilising," said Rabobank.
Away from policy, focus will be on any details of the ECB's strategic review. However, Rabobank thinks there will be no "major revelations" on this front.
"Back in December Ms Lagarde had already flagged that the ECB would start these deliberations early this year, and she also noted that the debate could run for quite some time," said Rabobank. "So it seems premature to expect any substantial conclusions at this stage."
The euro stood at USD1.1094 at midday Thursday ahead of the ECB announcement, higher than USD1.1073 late Wednesday.
Elsewhere in forex, the pound was quoted at USD1.3120 at midday Thursday, down from USD1.3137 at the London equities close on Wednesday.
Against the yen, the dollar was trading at JPY109.60 compared to JPY109.90 late Wednesday.
In commodities, Brent oil was quoted at USD62.34 a barrel midday Thursday, down from USD63.14 late Wednesday. Gold was quoted at USD1,554.01 an ounce against USD1,557.45 at the close on Wednesday.
Amid the subdued trading in Europe on Thursday, stock prices in New York were seen mixed. The Dow Jones was called down 0.1%, the S&P 500 index flat, and the Nasdaq Composite pointed up 0.1%.
In London, Anglo American held all production guidance for 2020 after meeting targets for 2019.
Anglo American's copper equivalent production for 2019 was 4% higher than the year before, boosted by the Minas Rio iron ore operation in Brazil, which ramped up after being shut down in 2018 due to pipeline leaks. Copper production in the fourth quarter of 2019 was 159,000 tonnes, 13% lower than the year prior, with the annual figure down 5% at 638,000 tonnes.
Diamond production from Anglo's De Beers was 15% lower at 7.8 million carats, with the annual figure falling by 13% on 2018 to 30.8 million carats.
Minas Rio in Brazil produced 6.2 million tonnes of iron ore in the fourth quarter, having produced a minimal amount the year before, with production only restarting at the end of 2018.
"We have delivered our full-year production targets across the business. Production is up 4% for the quarter led by the continued successful ramp-up at Minas Rio in Brazil," said Chief Executive Mark Cutifani.
Shares in the miner were down 1.4% at midday, along with peers such as Antofagasta, down 3.0%. and Rio Tinto, down 2.1%. This was over concerns that a further spread of coronavirus in China will hit the industry-heavy country's economy.
Other companies exposed to China were lower, particularly those involved in tourism, with British Airways-parent IAG down 2.2% and Intercontinental Hotels, which has over 400 hotels in greater China, down 2.1%. Luxury retailer Burberry was down 1.0%.
In the FTSE 250, PayPoint slipped 4.0% as it warned profit will grow at a more modest than expected pace.
The company, which operates a bill paying platform, said net revenue increased by 4.2% to GBP32.7 million in the three months to the end of 2019. This growth was helped by an increase in service fees and a robust performance in bill payments in the UK and Romania.
However, PayPoint said the warmer weather over the period of the festive season and the first three weeks of January continues to affect energy transactions within UK bill payments. In addition, parcel volume growth remains towards the lower end of its expectations.
Overall, PayPoint said it remains confident that there will be a progression in pretax profit excluding exceptional items for the financial year ending March 31, albeit said it is now likely to be at a more modest rate than previously expected.
Mothercare was down 10%. The parents and baby products retailer unveiled a cluster of board changes and warned that debt reduction measures following the administration of its UK unit was "behind expectations".
Mark Newton-Jones has stepped down as chief executive with immediate effect, but will remain as an executive director until July. Thereafter, Mothercare said he has agreed to "make himself available as a non-executive director".
Glyn Hughes, who served as chief financial officer during the restructuring period, takes over as CEO on an interim basis, also with immediate effect. Immediately replacing him as CFO is Andrew Cook, who joins the company's board following a spell as Mothercare's corporate development director since April 2019.
Although the administration of its UK unit helped with a "substantial" trimming of debt, the reduction was still behind the company expectations, Mothercare noted. The company said this was due to a shortfall in cash in relation to stock clearance of the unit.
Mothercare warned: "We currently estimate that the group may therefore have an obligation to make good a shortfall of some GBP10 million in relation to these loans."
ASOS shares were up 2.7% at midday, having traded more than 10% higher during the morning.
The online fashion retailer said a "better than expected" Black Friday trading period contributed to a double-digit sales climb in the first four months of its financial year.
In the period to December 31, total retail sales rose 20% to GBP1.07 billion from GBP895.0 million the year before. Revenue, which includes delivery fees and third-party income, was also up 20% year-on-year, climbing to GBP1.10 billion from GBP917.9 million.
By Lucy Heming; lucyheming@alliancenews.com
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