LSE: FTSE 100 lower on China slowdown concerns

Britain’s FTSE 100 index fell in early European trade on Monday after a weak showing in New York on Friday and downbeat overnight manufacturing data from China that spurred fears of economic slowdown, which is expected to drag on the regions stock markets. Upbeat Eurozone manufacturing and services PMIs provided support. Investors also eyed upcoming diplomatic talks that are to determine the West’s reaction to Russia annexing Crimea.

Britains blue-chip index fell by 0.14% to 6 548.30 points by 9:07 GMT, having shifted in a daily range between 6 529.50 and 6 564.80 points. It closed 14.73 points on the upside on Friday at 6 557.17 and settled the week 0.46% higher.

European equity indexes fell on Monday after a preliminary gauge of manufacturing activity in China showed a third straight monthly contraction in the sector. The HSBC Flash China Manufacturing PMI, prepared by HSBC and Markit Economics, fell to an eight-month low of 48.1 in March from February’s final reading of 48.5. The figure also fell short of analysts’ expectations for a jump to 48.7.

Meanwhile, China’s Flash China Manufacturing Output Index slid to 47.3 this month from 48.8 in February, an eighteen-month low. The negative readings, coupled with previous weak data points released earlier in the month, spurred fears the world’s second-biggest economy and oil consumer may not be able to meet Premier Li Keqiang’s 7.5% annual growth rate target.

In the Eurozone, Frances preliminary manufacturing PMI unexpectedly rose to 51.9 this month from a final reading of 49.7 in February and compared to analysts’ median estimates of 49.7. If confirmed, this will be the fastest pace of expansion in French manufacturing activity since June 2011.

In addition, the French preliminary services PMI jumped to a two-year high of 51.4 this month from a final reading of 47.2 in February and compared with experts’ forecasts of an increase to 47.5.

In Germany, factory production growth marked a slowdown in March, with Markits preliminary German Manufacturing PMI registering at 53.8, down 1 point from Februarys final reading of 54.8. Analysts had expected a minor decrease to 54.6.

Meanwhile, the leading Eurozone economys services sector activity slid to 54.0 from Februarys 55.9, compared to projections for a drop to 55.5. A composite measure of both industries fell to 55.0 from Februarys 56.4, which was the highest since May 2011.

Oliver Kolodeseike, an economist at Markit, commented on the report: “Germany’s private sector economy continued to grow at a record pace at the end of the first quarter. Although the rate of expansion in activity eased to a three-month low, growth in the three months to March was the joint-strongest since mid-2011.”

A separate report showed the Eurozones manufacturing activity expanded in March, although at a bit slower pace, compared to a month earlier. The single currency blocs preliminary manufacturing PMI registered at 53.0 compared to 53.2 in February, while its services PMI fell to 52.4, compared to analysts projections to remain flat at 52.6.

Gainers, losers

FTSE 100s top three gainers were Tesco, Lloyds Banking Group and Legal & General. Tesco added 1.07%, or 3.12 pence, to 294.03 pence by 9:09 GMT. Lloyds jumped by 1.29%, or 0.995 pence, to 78.365 pence, while Legal & General rose by 2.21%, or 4.55 pence, to 210.55 pence.

The top three losers were William Hill, Mondi and Smiths Group. Mondi was down 1.69% by 9:11 GMT, or 17.50 pence, to trade at 1 017.50 pence, while Smiths Group fell by 1.93%, or 25.50 pence, to 1 297.50 pence. William Hill retreated 2.29%, or 7.75 pence, to 331.35 pence.

SSE fell by 1.56%, or 23.50 pence, to 1 486.50 pence, while Centrica declined 1.14%, or 3.85 pence, to 334.05 pence. The Sunday Times reported that the six biggest utilities in the UK may fall this week as the energy regulator Ofgem turns to the competition watchdog.