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LONDON (Alliance News) - London shares ended down Monday, amid fears over China's economy and a retreat in oil prices, but FTSE 100 gold miner Randgold Resources managed to end higher after calling 2015 "one of the best years in the company's history".
The FTSE 100 index ended down 2.7% at 5,689.36 points, the FTSE 250 mid-cap index down 3.2% at 15,497.99 and the AIM All-Share down 1.3% at 680.90. In Europe, the CAC 40 in Paris closed down 3.2% and the DAX 30 in Frankfurt down 3.3%.
At the London equity close, stocks in New York were down, with the Dow Jones Industrials and the S&P 500 both down 2.4% and the Nasdaq Composite down 2.9%.
Chinese stock markets were closed Monday for Chinese New Year. However, concerns about the Asian giant's economy continued to weigh on European and US stocks, following weak foreign exchange reserves data released on Sunday.
China's foreign exchange reserves declined to their lowest level since 2012, data published by the People's Bank of China showed. Foreign exchange reserves fell by USD99.5 billion to USD3.23 trillion in January. The decline was followed by a USD107.9 billion decrease in December.
In 2015 as a whole, reserves dropped by more than USD510 billion. After an unexpected currency devaluation by PBoC last August, the central bank had to use its reserves to curb the further weakness in yuan.
Also in Asia, the Japanese Nikkei 225 in Tokyo ended 1.1% higher. China's stock market will be closed on Tuesday as part of the new year celebrations.
Oil prices put pressure on stocks, as the commodity declined for the third consecutive session. North Sea benchmark Brent oil was at USD33.73 a barrel at the London close, having stood at USD34.40 a barrel at the close on Friday, with US benchmark West Texas Intermediate at USD30.52.
"It looks like oil traders are once again discouraged by a slightly stronger dollar and the lack of any breakthrough in talks between some OPEC and non-OPEC producers," said FOREX.com analyst Fawad Razaqzada.
Over the weekend, oil ministers from Saudi Arabia and Venezuela discussed cooperation among OPEC and non-OPEC nations to bring stability in oil production, although no plans to cut output were agreed.
Royal Dutch Shell 'A' ended down 1.0%, BP down 0.4% and BG Group down 0.5%.
Oil services companies John Wood Group, down 9.9%, Petrofac, down 5.0% and Amec Foster Wheeler down 4.9%, were hit by price target cuts by Goldman Sachs and Nomura. Goldman added John Wood to its 'Conviction Sell List', while Nomura cut Amec to Neutral from Buy.
Nomura said it expects order books to "surprise to the downside". The broker said its analysis of backlog shows a sharp drop from the 2012 sector peak and that consensus estimates remain "too high". Nomura's 2017 order book estimates for the whole sector are USD94 billion, while the broker said consensus stands at USD113 billion.
Meanwhile, WPP dropped 4.2% after Investec downgraded the advertising and public relations giant to Hold from Add, citing increased risk to global economic growth expectations.
ARM Holdings ended down 5.8% after smaller rival Imagination Technologies Group said conditions in the semiconductor industry have "not improved" since its last update in December, when it reported first-half results. The slowdown in the semiconductor sector has continued, compounded by uncertainty over future trading prospects in China.
As a result, Imagination Tech said it now expects to report a loss before interest and tax for its full year to end-April. Chief Executive Hossein Yassaie paid the price and stepped down with immediate effect. Shares in Imagination Tech ended down 1.9%.
Rolls-Royce Holdings ended down 2.6%. The engine maker is expected to cut its dividend on Friday for the first time in almost 25 years. It could come in at anywhere between 9.27 pence and 25.30p, with the median average of the analysts at 16.20p, versus 23.10p paid for 2014.
Underlying pretax profit is expected to fall to GBP1.3 billion from GBP1.6 billion, according to the consensus estimates of 21 analysts polled by Rolls-Royce itself, with forecasts ranging between GBP1.0 billion and GBP1.4 billion.
Among a handful of gainers in the blue-chip index, Randgold Resources closed up 3.3%. The gold miner said 2015 was "one of the best years in the company's history" despite experiencing a large drop in profit as it continued to battle the downturn in the market.
Randgold reported a USD260.8 million pretax profit in 2015, falling from USD353.0 million a year earlier, as revenue slipped to USD1.00 billion from USD1.09 billion - but the miner is expecting a ramp up in production and lower cash costs during 2016. Production and costs in the year were in line with expectations and the company upped its dividend for 2015 by 10% to 66.0 cents per share from 60.0 cents per share last year.
The strong performance helped lift the shares of peer Fresnillo, up 7.2%, as did a rise in the price of gold. The yellow metal was adding to its recent gains, quoted at USD1,194.07 an ounce at the London equities close. Gold stood at USD1,155.50 an ounce at the London equities close Friday.
In the FTSE 250, Ocado Group ended down 7.2% after Barclays reduced its price target on the UK online grocery delivery company, keeping an Equal Weight stance, as the bank believes the group has "low visibility" even though it has "strong potential".
"While we can see clear potential upside (and have only limited concern about [US giant] Amazon's growing grocery presence in the UK), we struggle to have sufficient faith in an imminent international deal to justify an Overweight stock rating," said Barclays analyst James Anstead.
Books and stationery retailer WH Smith closed down 3.8% after Deutsche Bank cut it to Hold from Buy, while Poundland Group ended up 1.0%, after the discount retailer was upgraded by Deutsche to Buy from Hold.
The pound was quoted at USD1.4429 at the London equities close, while the euro was standing at USD1.1192.
In the economic calendar Tuesday, German industrial output data are due at 0700 GMT, while UK trade balance data are expected at 0930 GMT. In the US, the Redbook index is due at 1355 GMT, while JOLTS job openings data are at 1500 GMT.
In the UK corporate calendar, TUI AG releases its first-quarter results, ICAP issues a third-quarter trading update, Redrow publishes its half-year results and New Europe Property Investments releases its full-year results.
By Daniel Ruiz; danielruiz@alliancenews.com
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