Poor non-manufacturing surveys from China, UK and US leave markets nursing losses as America prepares to vote
Mining shares led the market lower on renewed worries about a slowdown in China and news that Australia was scrapping plans for additional listings for foreign companies.
Disappointing non-manufacturing data from China - a key consumer of commodities - sent copper prices to a two month low and hit the whole resources sector. Kazakhmys closed 17.5p lower at 717.5p, Eurasian Natural Resources Corporation fell 12.2p to 321.3p and Rio Tinto lost 69p to £31.45. Vedanta Resources dropped 42p to £11.18, not helped by Citigroup downgrading the group from buy to neutral.
On top of that, Australia's stock exchange has reportedly decided against a proposal to quote unsponsored depository receipts of foreign companies. If the move had gone ahead it would have narrowed the spread for dual listed companies like Rio and BHP Billiton, 30.5p lower at 1991.5p.
The sector's decline weighed on the whole market, leaving the FTSE 100 29.49 points lower at 5839.06. There were also poor monthly service sector surveys from UK and US, while investors were unsettled by the imminent American election, as well as the forthcoming vote in the Greek parliament on its austerity package and 2013 budget.
Angus Campbell, head of market analysis at Capital Spreads, said:
Markets trod cautiously at the beginning of this week as uncertainty surrounding the outcome of the US presidential elections dominated trade putting investors on the back foot. With the outcome far from certain the future shape of the US political landscape remains in doubt. With both candidates offering two very separate paths the result of this election is as significant for the US economy as much as it is for the global economy.
Banks were also under pressure. HSBC fell 8.1p to 618p following a disappointing update and news of hefty money laundering fines, while Lloyds Banking Group lost 0.575p to 42.85p despite weekend reports it was considering a sale of its 60% stake in wealth manager St James Place, down 3.6p to 394.9p. Gary Greenwood at Shore Capital said:
At the current share price, Lloyds stake is worth around £1.2bn, albeit we think the shares are currently undervalued by the market, so a sale at this price would not maximise value for Lloyds' shareholders.
Two years after Prudential failed to buy Asian rival AIA, the insurer has made a move in the fast growing region.
In another challenge to AIA, Pru is paying £368m in cash for Thailand's Thanachart Bank, following its announcement of plans to open an office in Cambodia. The deal includes a 15 year exclusive partnership to sell bancassurance in Thailand through Thanachart branches.
The Pru's shares slipped 2.5p to 856p, and Andy Hughes at Exane BNP Paribas repeated his underperform rating.
Heading in the other direction was Weir, up 80p at £18.31, after the pumps and valves group said it was on track to meet full year expectations despite a weak oil and gas sector.
Accounting software specialist Sage added 1.9p to 313.6p as Numis raised its recommendation from hold to add.
But George O'Connor at Panmure Gordon kept his sell rating despite applauding some of the company's moves:
Research from industry analysts IDC points to European IT users accelerating their 'cloud' deployment. Fortunately Sage is just in time demonstrably weaving cloud technology into its core products – we note CRM and ERP X3 in particular. While the moves may seem piecemeal they do not appear to be a case of 'too little/too late' but will do little to drive Sage's missing ingredient - growth.
Our sell recommendation is predicated on those false take-over stories (gone in a puff of smoke) which have inflated the share price and lead to a valuation, a PE of 16.5 times, well ahead of the operational and valuation reality.
Centamin recovered some of the ground which it lost last week on reports an Egyptian court had ruled its rights to operate the Sukari gold mine were invalid.
The reports wiped around 40% off its share price, but the company eased some of the concerns, and they bounced back 14.05p to 74.55p, a 23% increase which made it the biggest riser in the FTSE 250.
It has now received the court's ruling, which rejected any attempt to terminate the company's concession agreement although it said insufficient evidence had been submitted to demonstrate ministerial approval had been given to allow the company to mine.
Centamin said it would appeal the decision and maintained it had documents showing the minister of petroleum and mineral resources had given approval, although these were somehow not in the court papers
But Telecity dropped 78p to 835p despite an in-line update, as the European data centre operator unveiled what analysts said was an expensive - albeit small - acquisition.
The company said trading remained strong across Europe, and its full year earnings were expected to be in line with City forecasts. But it also announced the €28m cash purchase of Academica in Finland. Analyst James Goodman at Investec said:
At €28m for 1MW of operational capacity, today's (admittedly small) deal seems very expensive. However, the business has an expansion plan to quadruple the capacity to 4MW which would clearly lessen the price, but would depend on the incremental capital expenditure required.
Dixons Retail, boosted last week following news that rival Comet was going into administration, suffered a bout of profit taking as investors had second thoughts about how much benefit the electrical retailer would actually get from the situation. Dixons dipped 0.93p to 24.91p.
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