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(Alliance News) - Stocks in London ended broadly lower on Thursday following weak economic data from China and increasing concerns over the US-China trade impasse.
Economic data released Thursday showed further signs of strain in China's economy, with a sharp slowdown in consumer spending and factory production, while investment growth hit a record low as the trade war with the US takes its toll.
Chinese industrial production growth slowed by more than expected to 4.7% in October on the year prior. Data from the Chinese National Bureau of Statistics on Thursday showed industrial output expansion decelerated from the 5.8% annual growth recorded in September.
The October print also disappointed the 5.4% October growth forecast by economists, according to the consensus cited by FX Street.
The UK large-cap index closed down 58.45 points, or 0.8%, at 7,292.76. The FTSE 250 ended down 57.98 points, or 0.3%, at 20,231.80, and the AIM All-Share closed up 3.19 points, or 0.4% at 888.07.
The Cboe UK 100 index finished down 0.7% at 12,375.62. The Cboe UK 250 closed down 0.3% at 18,164.99 and the Cboe UK Small Companies ended up 0.2% at 11,279.71.
In Paris the CAC 40 index ended down 0.1%, while the DAX 30 in Frankfurt ended down 0.4%.
"Global markets are on the slide today, following a disappointing set of Chinese data points overnight. The sharp decline in industrial production highlights the reason for global growth fears, with a lack of demand forcing producers to ease supply. Unfortunately, while we had previously expected to see the US and China meet in Chile this weekend, it feels as if that phase one trade deal remains some way from completion," said IG Group's Josh Mahony.
On the London Stock Exchange, Burberry Group ended the best blue chip performer, up 3.4% after the fashion house affirmed its full-year guidance after reporting a first-half earnings rise, despite uncertainty in Hong Kong.
In the six months to September 28, revenue rose by 5.0% to GBP1.28 billion from GBP1.22 billion. Comparable store sales grew 4%, comprising 4% growth in the first quarter which accelerated to 5% in the second. The company, known for its checked print and trench coats, reported pretax profit increased by 11% to GBP193 million from GBP174 million.
The luxury goods retailer upped its interim dividend by 2.7% to 11.3 pence per share from 11.0p last year.
Looking ahead, the company said it expects sales in Hong Kong, where there is increased civil unrest, to remain under pressure.
"Britain's most famous luxury brand is in the middle of a risky makeover, with the board last year hiring former Givenchy star designer Riccardo Tisci to take the company in a new direction and even more upmarket. The worry for investors when a firm embarks on such a transformation is that it will hit the bottom line but it’s clear from these results that the repositioning of its brand and the introduction of edgy new ranges is a gamble that is paying off," said eToro analyst Adam Vettese.
At the other end of the large cap index, 3i Group ended the worst performer, down 4.6%, despite the private equity investor reporting encouraging interim results.
3i reported an increased total return for the first half of its year and said it "saw a good performance" across its portfolios. Net asset value per share was 873 pence at September 30, up 13% from 776p a year ago. The company reported "good performance" across its portfolios, with the Private Equity portfolio recording a gross investment return of GBP666.0 million, driven by assets including Action, Hans Anders, and Aspen Pumps.
Fresnillo closed down 3.0% after Goldman Sachs cut the Mexican gold miner to Sell from Neutral.
In the FTSE 250, QinetiQ ended the best performer, up 9.2% after the defence firm kept annual forecasts unchanged after reporting double-digit earnings growth in the first half of its current financial year.
The Farnborough, Hampshire-based defence technology company reported a pretax profit of GBP71.3 million for the six months to the end of September, up 35% compared to GBP52.7 million a year prior, as revenue grew by 16% to GBP486.5 million from GBP420.3 million.
Looking ahead, the maintained expectations for full year operating profit, and forecasts high single-digit revenue growth.
Languishing at the foot of the midcaps, FirstGroup closed down 20% after the public transport operator reported a significantly wider interim loss due to an impairment on US coach operator Greyhound.
Aberdeen-based FirstGroup posted a pretax loss of GBP187.1 million for the six months to September, from just GBP4.6 million the prior year. On an adjusted basis, which strips out exceptional items, pretax profit fell 32% to GBP28.7 million.
The company booked a GBP124.4 million impairment on its Greyhound bus operations in the US, as well as a reserve charge of GBP59.3 million for its North American self-insurance business.
The company said the impairment was due to Greyhound's financial performance in recent months relative to budget, due to a decline in immigration on the southern US border and increased competition, and added it was "disappointed" with a further deterioration in the US motor claims environment which led to the increase in insurance costs.
FirstGroup saw GBP290 million sliced off its total market value, which on Wednesday had stood at GBP1.57 billion.
The pound was quoted at USD1.2855 at the London equities close, up from USD1.2840 at the close Wednesday.
In political news, Brexit Party leader Nigel Farage confirmed that he will not stand down any more candidates to help the Conservative Party win a majority in next month's UK general election.
Farage said that, if the Conservatives "showed some reciprocity", more Brexit Party supporters would be likely to support the Tories in the 317 seats in which Brexit Party candidates will not be sitting.
He said he thought that the Tories would be grateful after he withdrew candidates in the 317 seats the Conservatives won in the last election, but noted UK Prime Minister Boris Johnson's party had shown "a refusal on their part to give an inch" since the announcement.
The euro stood at USD1.1000 at the European equities close, flat from USD1.1010 late Wednesday.
In economic news from the continent, economic growth in the eurozone stood at 0.2% in the third quarter, unchanged from the previous estimate, according to official Eurostat figures published.
Growth has now held at an anaemic 0.2% for two quarters in a row, underlining the eurozone's plight amid global uncertainty.
Economic activity was weighed down by Germany, which nevertheless managed to dodge a recession with growth of just 0.1% in the same period.
Year-on-year, Germany GDP grew 1.0%, again beating forecasts for a 0.9% advance.
"Since the global economy is currently in a manufacturing recession, and Germany is a manufacturing powerhouse, it is no surprise that the German economy is bearing the brunt of the slowdown. Domestic demand isn't enough to offset this global drag," said Jack McIntyre, portfolio manager at Brandywine Global.
"On an overall basis, Europe is a taker of global growth while China and the US are the main contributors. What we see as a more important forecaster of German GDP is the direction of US and Chinese growth. If the German economy is going to do better, China needs to do better first," McIntyre added.
Against the yen, the dollar was trading at JPY108.65, flat from JPY108.74 late Wednesday.
Stocks in New York were mixed at the London equities close, retreating from record highs reached on Wednesday, amid deadlock in US-China trade talks.
The DJIA was flat, the S&P 500 index up 0.1% and the Nasdaq Composite down 0.1%.
China on Thursday said eliminating tariffs was a "condition" for reaching a trade agreement with the US, a demand US President Donald Trump said earlier this month that he had rejected.
The Commerce Ministry's remarks showed a sizeable distance still separates the Washington and Beijing dispute Trump's announcement last month that they had reached a "phase one" deal.
On the corporate front, retailer Walmart reported a strong third quarter performance with profit and revenue growth, on a solid performance from all operations.
For the three months to the end of October, pretax profit rose by 70% to USD4.37 billion from USD2.58 billion the year before, after revenue rose by 2.5% to USD128.00 billion from USD124.9 billion.
Walmart was down 0.1% on Wall Street.
Brent oil was quoted at USD62.95 a barrel at the equities close, up from USD62.40 at the same time the prior day.
Gold was quoted at USD1,465.47 an ounce at the London equities close, flat against USD1,464.30 late Wednesday.
The economic events calendar on Friday has eurozone inflation readings at 1000 GMT and US retail sales figures at 1330 GMT.
The UK corporate calendar on Friday has interim results from TalkTalk Telecom Group and annual results from FourFourTwo football magazine publisher Future.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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