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LONDON (Alliance News) - UK stock indices have had a mixed morning Thursday, with the FTSE 100 recovering from losses that followed flash Purchasing Managers' Index readings from Europe missing expectations.
Having dropped below the 7,000 mark for the second successive trading session, the FTSE 100 is slightly higher at 7,030.78 at mid-morning. However, the FTSE 250 is down 0.3% at 17,587.9, and the AIM All-Share index is down 0.1% at 748.61.
European stocks are under-performing with the French CAC 40 down 0.7%, and the German DAX 30 down 0.9%.
Germany's private sector growth moderated at the start of the second quarter, survey data from Markit Economics showed. The flash composite output index fell to 54.2 in April from an eight-month high of 55.4 in March. The latest index reading was still the second-strongest since last September.
The weaker increase in activity reflected slower growth at both manufacturers and service providers. Some companies attributed this to a weaker rise in new orders and increased prices. The services PMI dropped to 54.4 in April from 55.4 in March. It was below the expected score of 55.5. The manufacturing PMI fell unexpectedly to 51.9 from 52.8 in March. Economists had forecast the indicator to rise to 53.
Eurozone private sector growth pulled back from March's 11-month high in April. The slowdown reflected weaker rates of expansion in France and Germany, which offset an acceleration of growth in the rest of the region to the fastest since August 2007.
The Eurozone services PMI declined to 53.7 in April from 54.2 in March, while it was forecast to rise to 54.5. The manufacturing PMI dropped to 51.9 from 52.2 a month ago. Economists had expected the score to improve to 52.6.
"The weaker rate of expansion is a big disappointment, given widespread expectations that the [European Central Bank's] quantitative easing will have boosted the fledgling recovery seen at the start of the year," Chris Williamson, chief economist at Markit said.
The pound was initially knocked lower against other major currencies after UK retail sales unexpectedly declined in March. Retail sales declined 0.5% month-on-month in March, missing expectations of a 0.4% rise and February's growth of 0.7%. Year-on-year sales grew 4.2% but also fell short of the forecast for a 5.4% rise and February's growth of 5.7%.
The pound initially dropped against the dollar following the release, hitting a low of USD1.4958, but has since recovered slightly to trade at USD1.4994.
Two weeks ahead of the UK General Election, public sector net borrowing showed a year-on-year decrease. In the financial year ending 2015, PSNB totalled GBP87.3 billion, a decrease of GBP11.1 billion compared with the same period in the financial year ending 2014.
"The improving economy is the Conservative's key message in this year's general election, and today's public sector net borrowing figures have given the Tories a boost with just two weeks to go," says Dennis de Jong, managing director at UFX.com.
"George Osborne has been banging the drum that a Conservative government is voters only choice to deal with the deficit and he has plenty to shout about now that he has hit his borrowing target," de Jong adds.
On the London Stock Exchange, utility companies after a sector-wide note issued by Citigroup highlighted election risks but also increased some price targets. United Utilities Group is up 2.3%, Severn Trent is up 1.5%, Centrica is up 1.5%, and SSE is up 1.4%.
Glencore, down 3.6%, Old Mutual, down 3.5% and Legal & General, down 3.3%, lead the fallers of the FTSE 100 after going ex-dividend, meaning new buyers no longer qualify for the latest dividend payouts.
WPP is down 1.2% after it maintained its guidance for the full year as the stronger dollar helped boost revenues in its first quarter, although growth slowed after January, and it highlighted continued caution amongst its clients.
WPP said its revenue rose 8.3% in sterling in the quarter, boosted by the weakness of sterling against the US dollar although this was partly offset by the strength of sterling against the euro, and at constant currency revenue growth was 7.4%. On a like-for-like basis, meaning at constant exchange rates and excluding acquisitions and disposals, revenue was up 5.2%.
Pace shares have rocketed up 32% after the company agreed late Wednesday to be acquired by US broadband media technology company Arris Group Inc for GBP1.4 billion in cash and shares. Under the terms of the deal, shareholders of the FTSE 250-listed company will receive GBP1.325 in cash and 0.1455 of a Arris share for each Pace share, making a total consideration of GBP4.265 per share, a 28% premium to Pace's closing price on Tuesday. Shares in Pace are trading at 438.70p.
Technology components and systems manufacturer Senior is the worst performer in the FTSE 250, down 6.2%. The company said trading in the year to date has been broadly in line with its expectations and said its full-year profit estimates are on track as some short-term challenges were offset by beneficial foreign exchange movements.
William Hill is down 4.4% after it reported a drop in operating profit in the first quarter of 2015 during what the company said has been a slow start to the year, following its largest-ever loss-making week in sports betting in January. The bookmaker reported a 19% decline in operating profit to GBP16 million in the quarter ended March 31, which it said was hit by a GBP20 million cost from the point of consumption tax and an increased rate of Machines Games Duty.
The focus turns to the US in the rest of the economic calendar. Weekly initial and continuing jobless claims are due at 1330 BST, Markit manufacturing PMI is at 1445 BST, and new home sales figures are at 1500 BST.
Futures indicate Wall Street for a lower open, with the DJIA pointed down 0.4%, and the S&P 500 and Nasdaq 100 both expected to open 0.3% lower.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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