Imagination Technologies Group Share News (IMG)

LONDON (Alliance News) - London shares were lower Monday midday, and stocks in New York were called for a negative open, as investor confidence again was hit by concerns about China's economy, even with the Asian giant's equities markets closed for Chinese New Year.

The FTSE 100 index was down 1.7% at 5,751.82 points, the FTSE 250 down 1.6% at 15,754.21 and the AIM All-Share down 0.7% at 685.33. In Europe, the CAC 40 in Paris was down 2.4% and the DAX 30 in Frankfurt was down 2.5%.

"With China celebrating the Lunar New Year it was hoped that Chinese growth concerns would be absent from markets this week, but monthly data showing a fall in the country's foreign reserves has created some additional uncertainty surrounding official policy towards its exchange rate," said CMC Markets chief market analyst Michael Hewson.

China's foreign exchange reserves declined to the lowest since 2012, data published by the People's Bank of China showed Sunday. Foreign exchange reserves fell USD99.5 billion to USD3.23 trillion in January. The decline was followed by a USD107.9 billion decrease in December.

In 2015 as a whole, reserves dropped by a more than USD510 billion. After an unexpected currency devaluation by PBoC last August, the central bank had to use its reserves to curb the further weakness in yuan.

Stocks in New York were expected to track the losses in Europe, with the Dow 30 and the S&P 500 called down 1.1% and the Nasdaq 100 seen down 1.6%.

In the US corporate calendar, media giant Twenty-First Century Fox is expected to release its second-quarter results at 2100 GMT, while reviews provider Yelp will publish its fourth-quarter results after the US market close.

In the US economic calendar, the US labor market conditions index is due at 1500 GMT.

While the Chinese equity market was closed for holiday, the Japanese Nikkei 225 in Tokyo ended 1.1% higher.

On the London Stock Exchange, blue-chip chipmaker ARM Holdings was down 5.1% after smaller peer Imagination Technologies said conditions in the semiconductor industry have "not improved" since its last update in December.

Imagination Tech, which was the worst performer in the FTSE All-Share, down 7.8%, said that since it reported its first-half results in December, market conditions have not improved, and the slowdown in the semiconductor sector has continued, compounded by uncertainty over future trading prospects in China.

As a result, Imagination Tech said it now expects to report a loss before interest and tax for its full year to end-April. Chief Executive Hossein Yassaie paid the price and has stepped down with immediate effect.

Rolls-Royce Holdings was down 2.7%. The engine maker is poised to cut its dividend payment to shareholders for the first time in almost 25 years, the Guardian reported Sunday, following a series of profit warnings in the past two years.

The company reports full year results on Friday, and is expected to warn of more struggles ahead after already having outlined extensive cost-cutting plans, job cuts, and the scrapping of two divisions.

HSBC Holdings was down 2.7% on the news that the bank will pay USD470.0 million under a deal with US authorities to settle allegations of past "abusive" mortgage practices, covering loan origination, servicing and foreclosure.

The settlement, which was revealed on Friday and agreed with the US Justice Department, the Department of Housing & Urban Development and the Consumer Financial Protection Bureau, along with 49 state attorneys general and the District of Columbia, releases HSBC from civil claims over its past mortgage loan origination, servicing and foreclosure practices.

Meanwhile, WPP was down 3.6% after Investec downgraded the advertising and public relations giant to Hold from Add.

At the other end of the blue-chip index, Randgold Resources was the best performer, up 3.7%. The gold miner said 2015 was "one of the best years in the company's history" despite experiencing a large drop in profit as it continued to battle the downturn in the market.

Randgold reported a USD260.8 million pretax profit in 2015, falling from USD353.0 million a year earlier, as revenue experienced slipped slightly USD1.00 billion from USD1.08 billion - but the miner is expecting a ramp up in production and lower cash costs during 2016. Production and costs in the year were in line with expectations and the company upped its dividend for 2015 by 10% to 66.0 cents per share from 60.0 cents per share last year.

The strong performance helped lift the shares of peer Fresnillo, up 1.4%, as did a rise in the price of gold. The yellow metal was adding to its recent gains, quoted at USD1,174.07 an ounce at midday. Gold stood at USD1,155.50 an ounce at the London equities close Friday.

Several broker rating changes were moving stocks in the FTSE 250. Poundland Group was up 4.0%, after the discount retailer was upgraded by Deutsche Bank to Buy from Hold. Meanwhile, books and stationery retailer WH Smith was down 3.9% after Deutsche cut it to Hold from Buy.

John Wood Group, down 7.1%, and Amec Foster Wheeler, down 5.9%, both were amongst the worst mid-cap performers after the oil services companies were downgraded by Goldman Sachs and Nomura. Goldman Sachs added John Wood to its 'Conviction Sell List', while Nomura cut Amec to Neutral from Buy.

In the AIM All-Share index, Spectra Systems was up 24%. The company, which makes high-speed banknote authentication and brand protection technologies, said it is likely to report a 2015 profit "significantly in excess of market expectations".

Spectra said this was due to it becoming clear that the margin it had achieved on a hardware sensor contract was higher than predicted, together with an increase in materials sales in late 2015.

Meanwhile, Trinity Exploration & Production, was off 15%. The group said it agreed a further extension to the moratorium on repayments relating to its outstanding debt balance of USD13.0 million with its lender Citibank. It is no fewer than Trinity's 20th extension, which runs until February 19.

The company said that it is continuing talks with the lender to secure a further extension of its credit facilities, and added that it expects for there to be continued support, particularly following the announcement of the sale of substantially all of its onshore assets for USD20.8 million.

By Daniel Ruiz; danielruiz@alliancenews.com

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