LONDON (Alliance News) - UK stocks are set to open heavily lower on Friday after poor Chinese manufacturing data showed further signs of weakness in the world's second largest economy, while Greece prepares itself for snap elections in September.
The manufacturing sector in China continued to struggle in August as the contraction accelerated, a preliminary survey from Caixin showed. The purchasing managers' index score fell to 47.1, which is down from 47.8 in July and missed expectations of a slight fall to 47.7. It also moves further beneath the line of 50 that separates expansion from contraction.
"The Caixin Flash China General Manufacturing PMI for August has fallen further from July's two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving," said He Fan, chief economist at Caixin Insight Group.
In Asia Friday, stocks continue to slide, with the Japanese Nikkei ending down 3.0%, the Hang Seng down 2.1%, and the Shanghai Composite off 2.4%.
IG says futures indicate the FTSE 100 to open 97.89 points lower, 1.6%, at 6,270.0. The index ended down 0.6% at 6,367.89 Thursday following another heavy fall in Chinese stock markets that day, while disappointing US initial jobless claims data provided another suggestion the Federal Reserve may push back a US interest rate hike.
Wall Street also closed lower Thursday. The DJIA and the S&P 500 both ended down 2.1% and the Nasdaq Composite closed down 2.8%.
Greek Prime Minister Alexis Tsipras tendered his resignation on Thursday, paving the way for snap elections next month. Tsipras, who was elected only in January on pledge to renegotiate austerity measures, said he felt "a moral obligation to place this deal in front of the people, to allow them to judge...both what I have achieved, and my mistakes".
The election date is yet to be set, but government officials said the aim was to hold the election on September 20.
"We believe that this new development will halt the Greek administration and could even prevent the passing of the bailout-related legislation (ie, pension reform, the GBP50 billion asset fund, product market regulation, fiscal measures) until after the elections," say analysts at Societe Generale.
Oil prices remain under pressure Friday. US benchmark West Texas Intermediate continues to trade near six-and-a-half year lows at USD40.83 a barrel, while Brent oil remains near seven-month lows at USD46.14 a barrel.
Private healthcare company Spire Healthcare Group cut its revenue guidance for 2015 on the back of short-term challenges it expects to face in NHS activity in the second half, as the group's pretax profit and revenue both grew in the first half.
FTSE 250-listed Spire said it now expects flat revenue in the second half of 2015, compared to previous predictions for low single-digit growth, due to a slowdown in the flow of cases from the NHS to the independent sector in recent weeks. The cut to the revenue guidance means the group now expects its revenue and earnings before interest, taxation, depreciation and amortisation growth to be 4% to 6% for the full year.
HellermannTyton Group said its pretax profit and revenue both increased in the first half, buoyed both by a strong performance in the majority of its markets and by the effect of the weak euro, the currency in which it reports.
The FTSE 250 company, which makes wires and cables and which recently agreed to be acquired by UK-based automotive parts manufacturer Delphi Automotive for GBP1.07 billion, said its pretax profit for the six months to the end of June was EUR42.5 million, up from EUR34.6 million a year earlier.
In the economic calendar there are French, German and eurozone manufacturing PMIs at 0800 BST, 0830 BST and 0900 BST, respectively. UK public sector net borrowing is due at 0930 BST. In the US, Markit manufacturing PMI is due at 1445 BST.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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Spire Healthcare (SPI)