Victoria Share News (VCP)

LONDON (Alliance News) - UK stocks were trading slightly lower midday Friday, with investors looking ahead to economic releases from China over the weekend and the US Federal Reserve interest rate decision on Thursday next week.

The FTSE 100 index was down 0.4% at 6,133.09, the FTSE 250 was down 0.2% at 16,979.54 and the AIM All-Share was up 0.1% at 735.07.

European stocks were faring a little worse, with the CAC 40 in Paris down 0.8% and the DAX 30 in Frankfurt down 0.9%.

US futures were pointing to a lower open, with the Dow 30 down 0.2%, the S&P 500 down 0.3% and the Nasdaq 100 down 0.4%.

With few key economic releases on Friday, traders were positioning for next week, with key releases from China over the weekend and the highly anticipated Federal Reserve interest rate decision next Thursday at the conclusion of a two-day meeting. On Sunday, reports on Chinese industrial production and retail sales for August are scheduled, with investors looking for more insight into the state of the world's second largest economy.

China's industrial production is expected to accelerate 6.4% year-on-year, from the 6.0% growth seen in July, while retail sales are forecast to grow 10.5% year-on-year, matching the rise in July. Simultaneously released will be urban investment data from the National Bureau of Statistics of China. IG's market analyst Joshua Mahony believes that the data from China will most likely point towards "yet more trouble in the beleaguered Asian powerhouse".

The Fed's decision will be in focus for most of the week as investors continue to speculate about the likelihood of an interest rate hike from the US central bank. Michael Hewson, chief market analyst, said most of the market believe that the Fed will hold fire next week.

"While most in the markets seem to attribute a fairly small chance of a Fed rate hike next week, the latest US labour markets data would appear to tell a slightly different story, given the fairly robust jobs and vacancy data seen in the past week," Hewson said.

"On the flip side of the coin we have the World Bank, the [International Monetary Fund] and eminent people like ex-Treasury Secretary Larry Summers arguing that the Fed should hold off despite the fact that US two-year treasury yields are already yielding well above 0.7%," Hewson added.

In the only domestic release Friday, the Bank of England and GfK's inflation attitudes survey showed the public's median inflation expectation over the coming years fell to 2.0% from 2.2% in May. The survey, which was undertaken between August 6 and 11, also showed the public's long-term inflation expectation remained at 2.8% from the May survey.

On the London Stock Exchange, miners were the best blue-chip performers rebounding from the losses suffered on Thursday when the sector was hit by more poor economic data from China. Rio Tinto traded up 3.1%, Anglo American was up 3.2% and Antofagasta was up 2.7%.

Rio Tinto was also upgraded to Buy from Neutral by UBS, with the Swiss bank saying it believes Rio offers the most attractive valuation of the UK diversified miners.

Kingfisher shares also were beneficiaries of a UBS upgrade. The Swiss bank upgraded the DIY retailer to Buy from Neutral, saying the company's new management team is planning to simplify the business in terms of structure and the number of products it sells, which should generate significant savings and boost the group's profit out to 2018. Kingfisher traded up 1.6%.

Associated British Foods was the worst blue-chip performer, down 3.0% despite reports of a successful launch for its first Primark store in the US. The discount retailer opened its store in Boston on Thursday, and The Times said large crowds were gathered outside ahead of the doors opening.

In the FTSE 250, office space provider Regus was up 2.6% after a report in the Daily Mail which suggested it may be the subject of bid interest from private equity suitors. The newspaper said it understood Mark Dixon, the company's chief executive, recently turned down a GBP3.0 billion offer from a private equity company, rumoured to be US group Blackstone.

But the paper said he has apparently indicated that the group would be open to a bid valuing the company closer to GBP4.0 billion, which would represent a 40% premium to Regus's current market cap of GBP2.81 billion. The stock is up 45% in 2015 to date.

In the AIM All-Share index, Redhall Group, down 38% to 6.245 pence. The manufacturing and specialist services company said it has launched a placing and open offer to raise up to GBP5.8 million to cut its debt pile.

Redhall said it will raise the funding by issuing 115.3 million shares at 5.0p per share, a significant discount to its 10.125 pence closing price on Thursday. It added that the placing and open offer, together with a debt conversion it has agreed with Henderson and HSBC Bank, will result in its group debt being reduced by up to GBP8.3 million.

Victoria traded up 12% after the carpets company said it has agreed to buy carpet underlay manufacturer Interfloor Group of the UK for GBP65.0 million in cash.

"We believe that Interfloor, as the market-leader, will be an excellent addition to the group, bringing the complementary established underlay brands of Tredaire and Duralay in alongside our growing portfolio of well-respected carpet and hard-flooring brands. In the UK, Interfloor and Victoria share many of the same customers and there will be significant opportunities to capitalise on this," Chairman Geoff Wilding said in a statement.

Still ahead in the economic calendar, US producer price index is due at 1330 BST, before the Reuters/Michigan consumer sentiment index, due at 1500 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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