LONDON MARKET MIDDAY: Pound Down As UK Growth Slows, Brexit Vote Looms

LONDON (Alliance News) - Sentiment among equities investors was subdued in London on Monday following weak economic data out of China over the weekend, but the foreign-earner heavy FTSE 100 index was just about in the green at midday as the pound fell after data revealed slowing UK economic growth.Also weighing on sterling was the prospect of Tuesday's high-stakes vote in Parliament on UK Prime Minister Theresa May's controversial EU withdrawal agreement.The pound was quoted at USD1.2680 at midday, down from USD1.2750 late Friday. Even so, the FTSE 100 index of large-cap stocks was up just 2.52 points at 6,780.63, while the mid-cap FTSE 250 was down 171.00 points, or 1.0%, at 17,673.11. The AIM All-Share was down 0.8% at 890.06.The Cboe UK 100 was down 0.1% at 11,505.33, while the Cboe UK 250 was down 1.2% at 15,800.10 and the Cboe UK Small Companies down 0.5% at 11,118.63.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both down 0.5%.Markets in the US are set for a lower start to the week, with the Dow Jones, S&P 500 and Nasdaq all pointed down 0.3%.Stock markets were broadly lower after data on Saturday showed Chinese exports grew just 5.4% in November, considerably slower than the 16% growth in October. Meanwhile, imports rose 3% - the slowest rate in at least a year - to USD182.7 billion"This economic weakness coming as it does, against a backdrop of increasing concerns that there will not be a speedy conclusion to the trade tensions between the US and China, is giving investors little reason to buy back into the market at a time of the year when volume and liquidity is likely to decline further," said CMC Markets chief market analyst Michael Hewson.He added: "More worryingly for the global economy is the decline in exports which would appear to suggest that global demand is waning, with exports to all of [China's] main markets down from the pick-up that we saw in September and October."On the London Stock Exchange, Interserve shares had plummeted 51% to 11.90 pence by midday after the support services firm warned of "material dilution" for current shareholders if it implements a restructuring plan. In the year-to-date, the stock is down 87%. This time last year, Interserve shares traded around 65p. Five years ago, they were worth about 650p each.Interserve confirmed its lenders are engaged in talks regarding the agreement and implementation of a deleveraging plan, which it said would deliver a strong balance sheet. The company confirmed that the plan is likely to involve the conversion of a substantial proportion of its external borrowings into new equity. If implemented in this form, the deleveraging plan could result in "material dilution" for current shareholders.However, Interserve highlighted that it continues to trade well and in line with its expectations for the year to the end of December."We are making good progress on our deleveraging plan which we expect to announce early in 2019. Our lenders are supportive of the deleveraging plan which will underpin the long-term future of Interserve," said Chief Executive Debbie White.In the FTSE 250, Just Group shares leapt 22% after the UK Prudential Regulation Authority said new rules regarding equity release mortgages won't come into effect until the end of 2019.The retirement specialist insurer said it has already aligned its new business pricing with the expected capital requirements from the PRA's consultation paper. Just Group, in particular, said it "welcomes" the confirmation that transitional relief will remain available for pre-2016 business."We welcome the greater clarity provided by the policy statement, and the PRA's recognition of the important role played by equity release mortgages for our customers as they plan their retirement finances. The regime envisaged is considerably less onerous for Just than set out in the consultation paper, particularly in respect of pre Solvency II business, and the outcome is well within the range of what we have been planning for," said Chief Executive Officer Rodney Cook.Private healthcare services provider Spire Healthcare Group was up 8.9% after Morgan Stanley raised its rating on the stock to Overweight from Equal Weight.Meanwhile, Crest Nicholson shares dropped 6.1% after Peel Hunt cut its recommendation on the housebuilder to Reduce from Hold. The broker also downgraded its rating on blue-chip housebuilder Barratt Developments to Add from Buy, with shares in the company down 1.9%.In UK economic data, over the three months to October, GDP rose 0.4% compared to the previous three months, according to the Office for National Statistics. This compares to the 0.6% quarter-on-quarter increase recorded in the three months to September.Rolling three-month growth in the manufacturing sector was flat, but month-on-month it contracted by 0.9%. The manufacture of motor vehicles fell by 6.6%, due in part to the impact of factory shutdowns - such as at Jaguar Land Rover - and weaker consumer demand for cars.Head of national accounts at the ONS Rob Kent-Smith said: "GDP growth slowed going into the autumn after a strong summer, with a softening in services sector growth mainly due to a fall in car sales. This was offset by a strong showing from IT and accountancy."Manufacturing saw no growth at all in the latest three months, mainly due to a decline in the often-erratic pharmaceutical industry. Construction, while slowing slightly, continued its recent solid performance with growth in housebuilding and infrastructure."The figures come as MPs return to Westminster ahead of Tuesday's Brexit showdown to vote on Prime Minister May's controversial withdrawal agreement. May's political future appears uncertain if she loses, but her credibility would also suffer a serious blow if she attempts to postpone the Commons vote.Downing Street has insisted the vote will go ahead as planned on Tuesday and Brexit Secretary Stephen Barclay said it was "100% happening", but rumours continue to swirl at Westminster that May could decide at the 11th hour to avoid a potentially heavy defeat if Tory whips cannot limit the revolt over her Brexit deal and the controversial Irish backstop arrangement.Likely to give courage to pro-Remain MPs, the European Court of Justice ruled on Monday that the UK could unilaterally decide not to leave the EU. The petitioners, who initially brought the case before the Scottish courts, had asked whether Britain can reverse its decision to trigger the Brexit countdown, arguing that lawmakers should be aware of all options when they cast their Brexit votes.The UK government had said, however, that the issue is hypothetical since it has no intention of doing so.