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LONDON (Alliance News) - The UK's major stock indices are lower Monday, while the AIM All-Share is outperforming its main market peers to record gains. There is no UK economic data out on Monday, but some positive European data has boosted the euro against the dollar.
Major equity markets also have taken notice of a down day in Asia following weekend reports that Chinese banks are becoming more strict on lending to property developers. "The tightening, which is likely to remain until end of March, is viewed as a negative in the short-term as the authorities try increase the quality of credit on offer to help overall growth," said Spreadex Financial Sales Trader Lee Mumford.
By mid-morning Monday, the FTSE 100 is down 0.5% at 6,803.00, the FTSE 250 is down 0.6% at 16,368.90, and the AIM All-Share is up 0.6% at 886.58.
Consumer prices in the eurozone rose by a steady pace of 0.8% year-on-year in January, showing an unchanged growth rate from December, according to official CPI data. The reading should provide some relief for policy makers at the European Central Bank, as economists had expected price growth to slow to 0.7%. On a month-on-month basis, prices fell by 1.1% in January, in line with expectations, having risen by 0.3% in December.
German IFO survey, released earlier in the morning, also provided a positive surprise. The closely watched indicator of current business climate conditions recorded 111.3 in February, up from 110.6 in December. Economists had expected the reading to remain unchanged.
The euro jumped against the dollar after the two data releases, peaking just below its recent 8-week high of USD1.3773. The euro also peaked against the pound following the IFO data, but the pound has regained strength to traded close to flat against the single currency over the morning session. Against the dollar the pound trades at USD1.6655.
Within UK equities, the banks are leading the FTSE 100 lower, with HSBC the biggest blue chip faller Monday. Although the group's annual profits were up by more than 9%, the result fell short of the markets expectation, and its shares have been sent 3.7% lower. The morning's headlines also will stoke criticisms of bank bonuses, with HSBC planning to compensate staff who will receive a smaller bonus due to new EU rules with share payouts.
Associated British Foods also is lower Monday. The stock is down 2.8% after reporting that its performance was held back by the weak sugar pricing that also has hurt peers such as Tate & Lyle. The group's overall earnings were supported by a strong performance at fashion retailer Primark.
Vodafone leads the FTSE 100 gainers on a technical move after carrying out it 6-for-11 share consolidation. The consolidation comes after the US's Verizon Communications announced on Friday that it had completed its acquisition of Vodafone's 45% interest in Verizon Wireless in a deal valued at around USD130 billion. Monday's movement makes Vodafone the largest stock in the UK by market capitalisation, having overtaken HSBC.
Bunzl shares are up by 3.7% after delivering full-year results that beat analyst expectations on almost all metrics. Shore Capital said it expects the results to lead to an upgrade to its earnings forecasts for the current year and beyond.
With no UK data due, there are just numbers from the US still to come Monday. The Chicago Fed National Activity Index is due at 1330 GMT, followed by the preliminary Markit services PMI at 1358 GMT, and the Dallas Fed Manufacturing Business Index at 1530 GMT.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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