LONDON MARKET MIDDAY: Miners Supported By Chinese Stimulus Hopes

LONDON (Alliance News) - London stocks were mixed Monday midday, with the mining sector propping up the FTSE 100 after weak economic data from China raised hopes for further economic stimulus measures.

The blue-chip index was down 0.3%, or 29.24 points, at 6,109.26. The FTSE 250 was flat at 16,652.06, and the AIM All-Share index was down 0.2% at 723.38.

"Gains for the mining contingent suggest that disappointing Chinese data is being taken as a driver for more risk-asset friendly stimulus from Beijing to counter slowing economic growth," said Accendo Markets head of research Mike van Dulken.

China's industrial production and retail sales grew by less than expected in April, data from the National Bureau of Statistics showed, hitting hopes of stabilisation in the world's second-largest economy.

Industrial production rose 6.0% year-on-year, which was less than the 6.5% growth economists had forecast. In March, production had increased 6.8%. Retail sales, meanwhile, rose 10.1% year-on-year in April, which also was less than the 10.6% gain economists' had expected.

The National Bureau of Statistics attributed the slower growth in production to weak external demand, poor performance in the mining industry, rising commodity prices, and seasonal factors.

Among miners, Anglo American was up 5.1% - the top big-cap performer - Antofagasta was up 3.0% and Glencore was up 1.3%. FTSE 250-listed KAZ Minerals added 5.6%, the best of the mid-caps.

A higher gold price was supporting gold miners, with Fresnillo up 3.1% and Randgold Resources up 0.7%. The precious metal was quoted at USD1,281.59 an ounce at midday Monday, compared to USD1,269.64 at the London equities close on Friday.

Meanwhile, Lonmin was up 18% in London Main Market. The platinum miner operating in South Africa said it remains on track to deliver its full-year guidance, after reporting a narrower loss in the first half thanks to a small rise in revenue and a fall in impairments and other items.

Earlier Monday, Asian stocks had shrugged off the weak Chinese economic data, responding instead to the strong retail sales figures released by the US after the Asia close on Friday. In Japan, the Nikkei 225 index in Tokyo ended up 0.3% Monday. In China, the Shanghai Composite rose 0.8% and the Hang Seng index in Hong Kong added 0.8%.

Trading activity in Europe was subdued due to public holidays in France, Germany and Switzerland, which are celebrating Whit Monday. Whilst the Frankfurt market was closed, stocks opened for trading in Paris, with the CAC 40 index reading down 1.0% at midday.

Stocks in New York were expected to open flat to lower, with the Dow 30 and S&P 500 indices seen flat and the Nasdaq 100 called down 0.1%.

In the US economic calendar Monday, the Empire State manufacturing index is due at 1330 BST and the NAHB Housing Market Index at 1500 BST.

A rise in crude prices helped oil producers trade in the green, with BP up 0.2% and Royal Dutch Shell 'A' shares up 0.3%.

Brent oil was quoted at USD48.72 a barrel at midday Monday, having hit a high of USD48.87 a barrel previously, its highest level since early November. The North Sea benchmark stood at USD47.85 at the London equities close on Friday.

Elsewhere on the London Stock Exchange, British Land shares were among the worst blue-chip performers, down 1.8%. The property developer said its current committed development pipeline is "modest", but said there were significant opportunities across its portfolio, as it posted a slip in full-year pretax profit on lower valuation gains.

British Land reported a pretax profit of GBP1.33 billion for its financial year that ended March 31, down from GBP1.79 billion a year earlier, despite revenue rising to GBP590.0 million from GBP556.0 million.

British Land said this was "primarily due to a reduced level of property valuation movement reflecting the slowdown in yield compression and the recent increase in stamp duty on commercial property". For the recently ended financial year, British Land's valuation movement was a positive GBP616.0 million, down from a positive GBP884.0 million the year earlier.

Liberum kept a Hold stance on British Land, but said the shares will be hit by the uncertainty surrounding the Brexit referendum. "Despite robust figures, we would expect the softer outlook for occupational demand in Office and Retail to weigh on the shares, even if this is a temporary pause ahead of the EU referendum," said Liberum analyst David Brockton.

In the FTSE 250, Crest Nicholson Holdings was up 5.0%. The housebuilder said it has seen signs that both sales prices and build costs are moderating in its first half, as it said it was continuing its strategy to grow its average selling price.

Crest Nicholson said it is on track to reach its stated target of GBP1.00 billion revenue for the full year to October 31, after having seen a good performance in its first half to April 30.

Unit completions rose 7.0% in the half-year to 1,206,compared to the same period a year earlier. Forward sales at the end of April, excluding private rented sector, were at GBP324.0 million, up around 8.0% from the GBP300.0 million reported a year earlier.

Shares in specialty chemicals company Victrex were up 4.2%. The group said its pretax profit and revenue dipped in the first half amid mixed trading in end markets, though it forecasts an improvement in the second half. Victrex said pretax profit for the half to the end of March was GBP47.5 million, down 12% from the GBP53.9 million made a year earlier.

Revenue for the half fell 10% to GBP117.0 million from GBP130.3 million, and the group's gross margin declined 200 basis points to 62.9% from 64.9% year-on-year, mostly due to new plant costs. Victrex will pay a flat interim dividend of 11.73 pence.

Meanwhile, Aldermore Group was up 3.4% after Deutsche Bank upgraded the lender to Buy from Hold.

By Daniel Ruiz; danielruiz@alliancenews.com

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