LONDON MARKET MIDDAY: China Concerns Weigh On London Equities

LONDON (Alliance News) - UK stocks were trading lower Wednesday, with China-exposed stocks falling as the yuan hit a four-and-a-half-year low against the dollar.

Burberry Group, down 1.6% and Standard Chartered, down 1.5% were amongst the worst performing stocks in the FTSE 100. The luxury goods company and emerging market focused bank, both heavily exposed to the Chinese and Hong Kong markets, were trading lower amid concerns that China's central bank is guiding the yuan lower through fixings.

The yuan fell to a its lowest level against the US dollar since the end of April 2011 on Wednesday at USD0.15346.

There were further concerns for Standard Chartered and fellow Asia-focused bank HSBC Holdings, which traded down 1.3%. Reuters reported that China's central bank has suspended at least three foreign banks from conducting some foreign exchange business until the end of March.

The report, which cited three sources who have seen the suspension notices, said included among the suspended services are liquidation of spot positions for clients and some other services related to cross-border, onshore and offshore businesses.

The sources, who were speaking on condition that the banks were not named, told Reuters the notices sent to the affected foreign banks by the People's Bank of China gave no reason for the suspension.

While there was a negative reaction in London, Asian stocks ended mixed on Wednesday. The Nikkei 225 index in Tokyo closed up 0.3%, in its final trading session of the year. The Hang Seng in Hong Kong closed down 0.5% and will return to trade on Thursday for a half day, ending at 0400 GMT. The Shanghai Composite ended up 0.3%.

In London, the FTSE 100 index was down 0.4% at 6,290.57 points. The FTSE 250 was off 0.3% at 17,519.82, while the AIM All-Share was up 0.2% at 733.66. The London market will also be open for a half-day on Thursday, closing at 1230 GMT.

It was the final trading session of 2015 for the Paris and Frankfurt stock markets. At midday, the French CAC 40 was flat and the German DAX 30 was down 0.6%.

Ahead of the open on Wall Street, futures pointed to a slightly lower open. The Dow Jones Industrial Average was indicated 0.2% lower, while the S&P 500 and Nasdaq 100 indices were both pointed 0.1% lower. The New York Stock Exchange will be open as normal on Thursday.

Oil prices continued to retrace from their recent highs set on Tuesday. Brent hit a peak at USD37.96 a barrel on Tuesday but traded at USD37.10 at midday Wednesday. US benchmark West Texas Intermediate hit a high of USD37.91 a barrel and was quoted at USD36.89 a barrel Wednesday.

Oil prices are likely to see some volatility at 1530 GMT when the US Energy Information Administration releases its crude oil stocks figures for the week ended December 25. Stocks were expected to have fallen by 2.5 million barrels.

Also in the economic calendar, US pending home sales are at 1500 GMT.

In another quiet day for individual UK stock news in London, Mirada traded up 37% after it said its pretax loss narrowed slightly as revenue edged higher in the financial half year to the end of September.

The media technology company said it made a pretax loss of GBP812,000 in the half, compared to a GBP887,000 loss a year earlier, as revenue rose to GBP2.3 million from GBP2.2 million, boosted by the roll-out of its Iris Inspire product over the Televisa cable network in Mexico.

Mirada said the roll-out of the Televisa project was ahead of schedule, with two further networks in Mexico also due to roll-out its products by the end of the current financial year to the end of March. The company said its results for the half were ahead year-on-year and leave it on track to meet market expectations for the full year.

Mobile data products company Crimson Tide, up 16%, said it has started the process of seeking approval from its shareholders for a capital reconstruction. The group said the reconstruction is to create positive retained earnings on its balance sheet which would allow it to pay dividends in the future. Crimson Tide also will seek approval for share buy backs and will eliminate its deferred shares, it said.

Environmental Recycling Technologies was down 14% after the recycling technology company said its former chairman, Ken Brooks, does not intend to ask for repayment of the loan that he provided the company earlier this year and instead will convert the outstanding balance into shares.

The recycling technology company secured a GBP200,000 loan from then-chairman Brooks in July, which has now been fully drawn down. Though the loan is technically repayable on demand, Environmental Recycling said Brooks has no intention of calling in the loan at present and will convert the balance into shares in the company in due course.

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

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