LONDON (Alliance News) - UK equities had lost their early vigour by midday Monday, with heavy-weight mining stocks dragging on big- and mid-cap London stock indices following mixed economic data from China overnight.
The FTSE 100 index traded down 0.2% at 6,366.36 points, the FTSE 250 was flat at 16,887.99, while the AIM All-Share was up 0.3% at 742.87.
In Europe, the CAC 40 in Paris was up 0.4% and the DAX 30 in Frankfurt was up 0.9%. Shares in Deutsche Bank were trading 3.7% higher after the company announced a comprehensive restructuring programme that will reorganise both its leadership and its various operating divisions.
US stock futures indicated a modestly lower open on Wall Street. The DJIA and the S&P 500 were both pointed down 0.1%, while the Nasdaq 100 was seen flat. In the US earnings calendar, banking giant Morgan Stanley and oil field services company Halliburton have reported already, with technology and consulting company IBM also scheduled.
Both Morgan Stanley and Halliburton announced profit for the third quarter that fell compared to the same period last year.
Morgan Stanley said its earnings fell to USD0.74 billion, or USD0.34 per share. This was down from USD1.56 billion, or USD0.64 per share, in last year's third quarter. Analysts had expected the company to earn USD0.63 per share, according figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.
Halliburton said its earnings came in at USD0.27 billion, or USD0.31 per share. This was down from USD1.14 billion, or USD1.33 per share, in last year's third quarter.
Before the London open on Monday, the Chinese National Bureau of Statistics said the country's economy grew at its slowest pace since the global financial crisis in the third quarter. However, the annual GDP expansion of 6.9% beat forecasts for 6.8% growth after expanding 7.0% in the second quarter.
Some analysts had been concerned that China's economic growth would come significantly short of the government's 7% annual growth rate target due to the continued weak economic data from the country and the volatility in its equity market, which saw steep losses in August.
David McNamara, an economist at Davy, said that despite a tumultuous quarter for financial markets and the currency in the third quarter, Chinese GDP beat expectations once again. However, McNamara questioned the reliability of the data.
"While private sector surveys such as the [purchasing managers' indexes] have dipped into contractionary territory in recent month, the official indices have held up surprisingly well – making it difficult to gauge the scale of the slowdown in China," the economist said.
"In particular, the methodology for calculating its GDP deflator, a measure of inflation, could mean that real GDP has been significantly overstated in recent years. This leaves analysts with little in the way of certainty regarding the health of one of the world's largest economies," McNamara said.
Also released from China was industrial output, which rose an 5.7% year-on-year in September, missing forecasts for 6.0% growth and down from 6.1% in August, while retail sales, a key indicator of consumer sentiment, topped expectations with an annual rise of 10.9%.
London's mining sector traded lower following the economic releases from China, with the FTSE 350 Mining Sector Index down 1.9%. In the FTSE 100, Anglo American led the fallers down 5.0%, while Glencore was down 3.0% and BHP Billiton was down 1.2%.
Also amongst the fallers in London was Irish drug company Shire, down 1.2%. The company said the US Food and Drug Administration has requested an additional clinical study be undertaken as part of its complete response letter to the new drug application made for Shire's lifitegrast drug for treating signs and symptoms of dry eye disease.
The FDA also requested more information on the product quality, Shire said. The company said it recently completed a phase 3 study on lifitegrast which, if positive, will form the basis of its response to the US regulator's letter.
Elsewhere, UTV Media shares were up 5.8% after the broadcast and radio company struck a GBP100.0 million deal to sell its television assets to ITV. Under the deal, ITV will buy UTV's television unit, including its UTV Northern Ireland and recently launched UTV Ireland businesses, in order to strengthen its free-to-air business and allowing it to run a more efficient network, ITV said.
"Having successfully extended the reach of our television business with the launch of UTV Ireland, I believe that shareholder value can be maximised through our television interests becoming part of ITV's global broadcast and content business," said Richard Huntingford, UTV's chairman.
ITV shares were trading down 0.2%.
Tribal Group was the biggest faller in the FTSE All Share, down 37%, after the education and services company issued a profit warning. It said its focus on winning larger contracts has been to the detriment of its medium and smaller contract base.
Tribal said that while it has been successful in winning larger contracts, this has hit its pipeline of medium and smaller deals to complement the larger wins. In addition, it has been hit by contract delays which has resulted in deferred revenue and higher costs. Due to this, Tribal now expects its 2015 revenue to fall year-on-year and said its operating profit will be significantly lower than its previous expectations.
LGO Energy was the worst performer in the AIM All-Share index, down 38%. The oil and gas explorer said the mechanical problems suffered at the GY-678 well on the Goudron field in Trinidad will have "significant cost implications" for the company, and said the lost production from the well will reduce its cashflow forecasts.
The well was the last of a seven-well drilling programme on the field and was hit by the mechanical problem in September. The company has been trying to resolve the problem, specifically removing a stuck pipe, but has been unsuccessful.
The unsuccessful recovery attempts are set to cost the company USD1.9 million, and the company is "potentially liable" for the cost of the downhole equipment which was lost due to the mechanical fault, which is expected to cost a further USD1.5 million. The loss of anticipated production from the well has hit the company's cashflow forecasts, forcing it to hold discussions with its lenders.
The rest of the economic calendar is relatively thin, with US NAHB housing market index due at 1500 BST. At 1700 BST, Federal Reserve Bank of Richmond President Jeffrey Lacker speaks at an event hosted by the Virginia Chamber of Commerce and the Virginia Early Childhood Foundation.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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