LONDON MARKET MIDDAY: China Prompts Sell-Off In Europe; Insurers Fall

LONDON (Alliance News) - Share prices in London had slipped firmly into the red by midday on Monday following a slump in Chinese equities overnight."Europe is following the Asian lead, with a drastic 3% decline in Chinese indices providing an overwhelmingly bearish tone for early European trade. The decision from the Chinese central bank to reduce the amount of capital banks require to hold is expected to free up USD109 billion for the economy, this also highlights the expectation of further economic suffering in the country, with the US-China trade war looking likely to rumble on," said IG market analyst Joshua Mahony.Halma and Vodafone were among the fallers in the FTSE 100 on Monday, while insurers were bringing up the rear of the FTSE 250 following an update from Lancashire Holdings.The FTSE 100 was down 0.6%, or 44.64 points, at 7,273.90 by midday. The FTSE 250 was 0.6% lower, or 126.82 points, at 19,791.21. The AIM All-Share was down 1.3% at 1,055.14.The Cboe UK 100 was 0.7% lower at 12,344.24 and the Cboe UK 250 also declined 0.7% to 17,953.56, while the Cboe UK Small Companies was down 0.1% at 12,007.53.Over in mainland Europe at midday, the CAC 40 in Paris and DAX 30 in Frankfurt were both 0.8% lower.The biggest faller in the FTSE 100 on Monday was Halma, down 3.5% after Shore Capital downgraded the hazard detection firm to Hold from Buy. Another of Monday's losers, Vodafone, was also lower after a broker downgrade. Jefferies cut its rating on the telecommunications stock to Hold from Buy, leaving Vodafone shares trading down 2.4%.Meanwhile, Segro gained 1.7% after Goldman Sachs raised the property investor and developer to Buy from Neutral.Insurers were among those falling in the FTSE 250 following a third quarter warning from Lancashire Holdings, the stock down 5.5%.The insurer said it expects to post a negative return on equity for the third quarter of 2018 due to losses from a number of recent natural disasters including hurricane Florence and typhoons Jebi, Mangkhut and Trami. Lancashire, which provides specialty insurance and reinsurance products, estimates losses from recent natural catastrophe events to be in a range of USD25 million to USD45 million. It also expects to record a USD30 million net loss from its marine portfolio. Other insurers were hit in a negative read-across following the update, with Hiscox down 1.8% and Beazley down 3.3%.IP Group was down 3.0% after reporting that its portfolio company, Diurnal, did not see Chronocort meet its primary objective in a phase three trial.Chronocort is intended to treat congenital adrenal hyperplasia, an orphan condition in which patients have a block in cortisol production. The goal of the phase three trial was to "demonstrate the superiority of Chronocort to conventional therapy", a goal which was not met as both Chronocort and conventional therapy proved equivalent.Shares in Diurnal were a steep 61% lower at midday.Shares in fashion retailer French Connection jumped 29% as it mulled a sale of the business."The board confirms it is currently reviewing all strategic options in order to deliver maximum value for its shareholders, which includes the potential sale of the company," the struggling retailer said in a statement responding to weekend press reports.French Connection, however, added that there can be no certainty over an offer, nor as to the terms of any offer.In September, French Connection recorded a widened loss in the first half of its 2019 financial year on the back of store closures and a "tough" retail trading environment in the UK."French Connection has long been seen as a value trap - the business contains hidden value but ongoing problems with trading have seen the share price remain weak. A sale of the business could help to lift it out of the 'trap' as long as the suitor is prepared to invest some time and money in sorting out the bad bits and nurturing the good bits," commented Russ Mould, investment director at AJ Bell.In data on Monday, a quarterly survey from the British Chambers of Commerce said the UK economy is stuck in a rut due to Brexit uncertainties.The balance of manufacturing firms reporting a fall in domestic sales rose to 24, while that of services firms fell to 23. Domestic orders for manufacturing declined, while services reported improved domestic orders.In services, the export sales balance fell marginally to 14 and export orders held steady at 12 in the third quarter.The lobby warned that the slowdown in exports in the manufacturing sector, and many services firms seemingly giving up trying to hire new staff, should be cause for concern."There has never been a more important time for the government to bolster business investment, competitiveness and productivity, in the face of significant Brexit headwinds," Adam Marshall, Director General of the BCC said.Elsewhere, Chinese Foreign Minister Wang Yi gave US Secretary of State Mike Pompeo a cool reception Monday in Beijing, as he warned of "conflict and confrontation" between the two world powers.Wang told Pompeo the US has escalated trade frictions between the two economies, and undermined China's interests on issues such as Taiwan and other domestic and foreign policies, the state-owned China Daily reported."We demand the US stop the unwarranted accusations and wrongdoings against China immediately," Wang said, warning against the US "taking a wrong approach of conflict and confrontation."Pompeo is on an East Asia tour focused on deciding the next steps in North Korea's denuclearization.In the US on Monday, stock markets remain open as the Columbus Day is observed. The Dow Jones is called 0.3% lower, with the S&P 500 set to shed 0.2% and the Nasdaq seen tumbling a steep 1.4% at the open.While the US corporate and economic calendar is quiet on Monday, things begin to kick off at the end of the week with the start of third quarter earnings season. Results are due from banks such as Citigroup, JPMorgan Chase and Wells Fargo on Friday.