(Alliance News) - London stocks were lower at midday on Monday despite the collapse of Thomas Cook boosting rival tour operators, as some worrying eurozone data knocked investor sentiment more generally.
The FTSE 100 index was down 43.23 points, or 0.6%, at 7,301.69 Monday midday. The FTSE 250 was down 179.91 points, or 0.9%, at 19,989.49. The AIM All-Share was down 0.1% at 885.25.
The Cboe UK 100 index was down 0.5% at 12,385.60. The Cboe UK 250 was down 0.9% at 17,901.97, and the Cboe UK Small Companies 0.2% lower at 10,937.58.
"Risk aversion has seized investors this morning, a sharp contrast to the bullishness of last week," said Chris Beauchamp at IG.
"Throw in a shocking set of eurozone PMIs, even worse than expected, and a bunch of equity markets that have rallied hard over the past month and we have a recipe for some selling," he said.
The eurozone's flash composite purchasing managers' index fell to 50.4 in September from 51.9 in August, marking a six-year low, preliminary data from IHS Markit showed earlier on Monday.
The services reading fell to 52.0 from 53.5 in August, an eight-month low, while manufacturing slumped to 46.0 from 47.9. Any reading under 50 indicates contraction in the sector, while one above signals expansion.
The manufacturing slowdown was driven by new orders for goods and services falling for the first time since January, dropping at the steepest rate since 2013. And expectations for the year ahead remain stuck at one of the lowest levels seen since 2012, with lingering concerns over Brexit and economic growth.
"All in all, with the euro-zone's manufacturing sector in the doldrums and services activity starting to lose pace, there is little reason to think that GDP growth will pick up as the ECB and the consensus forecasts assume," said Jack Allen-Reynolds, economist at Capital Economics.
In mainland Europe at midday, the CAC 40 in Paris was down 0.9% while the DAX 30 in Frankfurt slid 1.1% following the downbeat data.
In the US, stocks are pointed towards a mixed start, with the Dow Jones seen down 0.1%, the S&P 500 flat and the Nasdaq up 0.1%.
The US and China ended preparatory discussions ahead of a fresh round of trade talks on Friday, with Chinese state media calling the meeting "constructive".
During the two-day consultations, deputy ministers from the two sides "conducted constructive discussions on economic and trade issues of common concern", the Xinhua news agency reported. The delegations "seriously discussed" arrangements for the upcoming round of trade talks in October, it added.
Ahead in the economic calendar on Monday, US IHS Markit services and manufacturing PMIs are due at 1445 BST.
In UK political news, Boris Johnson has played down the chances of a "New York breakthrough" on Brexit during discussions with key EU leaders at the United Nations.
The prime minister is set to meet with Angela Merkel, Emmanuel Macron, Donald Tusk and Leo Varadkar during the annual General Assembly in New York City. Johnson will this week discuss his proposals for a new Brexit deal as the October 31 deadline looms.
The PM will meet with European Council President Tusk on Monday, before meeting German Chancellor Merkel and French President Macron. Johnson will meet with his Irish counterpart Varadkar the following day.
The UK prime minister also was awaiting the judgement from the Supreme Court over the legality of his prorogation of Parliament, with an announcement on the timing of the ruling expected shortly.
In London, tour operators were the best performers following the collapse of peer Thomas Cook.
The venerable tour company was unable to secure the extra GBP200 million needed to keep the business afloat following a full day of crucial talks with the major shareholder and creditors on Sunday. Thomas Cook said it had "no choice" but to take steps to enter into compulsory liquidation with immediate effect.
"The removal of one main competitor will help these two grow market share, and in any case these firms are much better off financially than Thomas Cook. However the structural problems facing the industry, as with so much of the High Street, will continue to weigh on profitability," said IG's Beauchamp.
TUI was the best performer in the FTSE 100, up 7.5%. Jet2 owner Dart Group was up 7.4%, while online holiday booking firm On The Beach was up 6.2%.
Shares in budget airline easyJet were 3.6% higher after also receiving a broker upgrade by HSBC to Buy from Hold.
Newly relegated retailer Marks & Spencer was down 4.0% after reporting Chief Financial Officer Humphrey Singer has decided to leave M&S after just over a year in the role.
Marks & Spencer lost its FTSE 100 listing in the latest quarterly index review, its relegation to the FTSE 250 effective from Monday.
A succession process is now underway, during which Singer will continue with his responsibilities, and work with Chief Executive Officer Steve Rowe to ensure an orderly transition. Singer has been part of clothes, homewares and food retailer M&S since 2018, joining from electricals and telecommunications retailer Dixon Carphone, where he was finance director for four years.
"The departure of Marks & Spencer's finance director Humphrey Singer is the latest red flag from a business struggling to keep itself relevant in the modern retail world," commented Russ Mould, investment director at AJ Bell.
"Having only joined in 2018, Singer's exit could suggest there are tensions in the boardroom as the retailer tries to sharpen its proposition. The news of his departure comes only two months after Jill McDonald, the clothing, home and beauty managing director, left amid criticism over clothing stock levels," Mould noted.
By Lucy Heming; lucyheming@alliancenews.com
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