London midday: Stocks off intraday lows after manufacturing data

While losses have been trimmed since the open, Greek deficit fears continued to weigh on stocks at midday, with the banking peers Standard Chartered, Barclays and Royal Bank of Scotland among the heaviest fallers.Banks across Europe joined in with the sell-off, with French lenders BNP Paribas and Societe Generale dropping almost 6% and German peer Commerzbank falling over 4%.Despite Greece's tough austerity measures, the debt-stricken country revealed on Sunday that it will miss its deficit target for 2011, as it unveiled plans for job cuts across the public sector. According to its draft budget, Greece's deficit should reach 8.5% of gross domestic product (GDP) this year, well above the 7.6% target. While this is expected to be cut to 6.8% of GDP in 2012, the figure still comes below the 6.5% forecast. Meanwhile, many investors' eyes will turn to Manchester for the Conservative Party conference this week, which is being held at a time of unprecedented market volatility. Domestically, David Cameron appears to want to focus on a housing programme which will see council tenants given significant discounts if they choose to buy their properties. For markets, however, this is just a side show. The real issue facing UK PLC is the European debt crisis, which presents an acute problem for the Tory-led coalition. Events inside the Eurozone are a major threat to Britain's own economy which would undoubtedly be damaged by a European recession. In London, stocks have come off their worst levels of the day though, helped by a better-than-expected reading in the UK manufacturing sector. The Markit/CIPS manufacturing purchasing managers index (PMI) for the month of September has come in at 51.1, after last month´s 49.4 (Consensus: 48.5). Likewise, the latest Chinese PMI data (from the Chinese Federation of Logistics and Purchasing) has come in relatively better than expected, although market chatter continues to centre on downside risks to the country's economic outlook. Worries over a slow-down in Chinese economic growth continue to batter luxury goods firm Burberry. Nomura issued a note this morning ahead of Burberry's first half trading update on 12 October, saying that it forecasts a 50 basis point decline in the first half earnings before interest and tax margin in the key retail/wholesale division, due to increased investment in flagships, customer services and share schemes. However, falling copper prices weighed on mining peers Vedanta Resources, Kazakhmys and Rio Tinto. Vedanta was out of favour despite Cairn India (in which Vedanta is acquiring a large stake) announcing that it has discovered the first hydrocarbons in Sri Lanka, after drilling its CLPL-Dorado-91H/1z well, the first well to be drilled in the country in three decades. Cairn Energy was also lower. In contrast, precious metals miners Randgold Resources and Fresnillo were the high risers, as the market free-fall prompts nervous investors to rush for the perceived safety of gold and silver. Retailers were also in demand on the FTSE 250, with Dunelm, JD Sports, Mothercare and Sports Direct making good gains.OTHER MARKETSBrent crude was 0.55% lower at $102.19 and copper was 2.35% down at $307.80, while gold was 2.19% higher at $1,657.90 and silver was 3.2% up at $31.05.BCFTSE 100 - RisersRandgold Resources Ltd. (RRS) 6,420.00p +2.07%Fresnillo (FRES) 1,610.00p +1.51%Tate & Lyle (TATE) 629.50p +0.56%United Utilities Group (UU.) 625.00p +0.16%FTSE 100 - FallersAviva (AV.) 290.20p -4.98%Burberry Group (BRBY) 1,116.00p -4.94%Standard Chartered (STAN) 1,232.00p -4.27%Barclays (BARC) 154.70p -4.12%ARM Holdings (ARM) 541.00p -4.08%GKN (GKN) 168.90p -3.98%Smiths Group (SMIN) 960.50p -3.90%Wolseley (WOS) 1,545.00p -3.86%Xstrata (XTA) 789.60p -3.80%Royal Bank of Scotland Group (RBS) 22.60p -3.79%