London midday: Stocks flat as ECB rate cut speculation ramps up

24th Apr 2013 11:49

Stocks had trimmed gains and were trading broadly flat by Wednesday lunchtime as markets gave a mixed reaction to weak economic data from Germany with traders guessing at whether the figures will prompt the European Central Bank (ECB) to cut interest rates.However, the cautious mood on market this morning wasn't surprising, given the 2.0% surge on the FTSE 100 on Tuesday after disappointing purchasing managers' indices from the Eurozone sparked hopes that the ECB would ease policy when it convenes next week.Gross domestic product (GDP) growth figures from both the UK and US due over the next couple of days are also likely to make traders a little nervous. Consensus estimates are for a 0.1% expansion in UK GDP in the first quarter, and 3.1% growth in the States. Figures from the Ifo institute this morning showed that the deterioration of the German economy continued this month with the headline business climates index dropping from 106.7 to 104.4, missing the consensus estimate of 106.2. Both the current climate and expectations sub-indices also fell more than expected.Market Analyst Craig Erlam from Alpari said that a positive reaction to weak data has been something that traders have become accustomed to following comments from Jens Weidmann (head of the Bundesbank) who said last week that the ECB would only cut rates if data worsens."In suggesting that we could see a rate cut if we see a further deterioration in the economic data, he has now prompted the market to buy on weak data and sell on good, similar to what we saw at the end of 2012 before the Fed announced QE3," Erlam said.Meanwhile, analyst Thomas Harjes from Barclays Research said this morning that more sluggish data from Germany could imply that a return to positive growth in the Eurozone overall could be "postponed". This "strengthens the case for an ECB interest rate cut, possibly as early as next week", he added.FTSE 100: Standard Life jumps, while Barclays slumpsInsurance giant Standard Life was a strong riser after beating analysts' predictions in the first quarter after delivering strong sales and group assets under administration. The group recorded a 24% increase in long-term savings sales to £6.3bn and a 26% increase in long-term savings net flows to £1.4bn in the first quarter, compared to £5.0bn and £1.1bn, respectively, one year earlier. Mining stocks were also performing well with EVRAZ, Fresnillo, Vedanta and Rio Tinto among the best performers. ENRC was also in demand this morning after it announced that its Chairman Mehmet Dalman has decided to resign from the mining group.Barclays erased early gains and was trading in the red after its 25% fall in adjusted pre-tax profit in the first quarter. Sector peer Lloyds was making gains after saying that it will go ahead with its stock market flotation of 630 branches after the Co-op walked away from the planned purchase of the network.Insurance firm Aviva edged higher after saying that it has received €608m in cash from its Spanish partner Bankia following the settlement and transfer of its entire holding in joint venture Aseval.Several FTSE 100 constituents were trading ex-dividend this morning, meaning that new investors won't be able to get their hands on their latest dividend payments. These stocks include: Aggreko, Legal & General and Rolls-Royce.FTSE 250: Computacenter drops on cost guidanceComputacenter, the provider of IT infrastructure services and solutions, was a heavy faller early on after saying that it could see an increased provision for costs in the future as a result of "problem contracts" in Germany. Weakness in the region held back revenue growth in the first quarter.Construction, services and property firm Kier Group fell after offering £221m for smaller peer May Gurney, trumping Costain which had announced its intention to merge with the company last month.Online retailer N Brown surged after seeing a 2.6% increase in annual profits on 6.0% growth in revenue on the back of a growing trend towards shopping on the web.FTSE 100 - RisersStandard Life (SL.) 374.90p +6.35%Evraz (EVR) 165.50p +4.61%Vedanta Resources (VED) 1,209.00p +4.22%Fresnillo (FRES) 1,137.00p +4.12%Rio Tinto (RIO) 3,025.50p +4.00%Glencore International (GLEN) 325.75p +3.76%Xstrata (XTA) 990.50p +3.72%Antofagasta (ANTO) 914.00p +3.39%Polymetal International (POLY) 764.00p +3.17%Randgold Resources Ltd. (RRS) 4,965.00p +2.77%FTSE 100 - FallersCentrica (CNA) 374.90p -4.63%Legal & General Group (LGEN) 166.90p -4.14%Tesco (TSCO) 362.95p -2.90%Associated British Foods (ABF) 1,950.00p -2.45%Rexam (REX) 509.50p -2.39%Rolls-Royce Holdings (RR.) 1,126.00p -2.09%Hargreaves Lansdown (HL.) 959.50p -1.99%Old Mutual (OML) 201.30p -1.95%Barclays (BARC) 292.90p -1.81%Experian (EXPN) 1,124.00p -1.58%FTSE 250 - RisersSmith (DS) (SMDS) 228.70p +6.03%Kazakhmys (KAZ) 360.00p +5.79%Ocado Group (OCDO) 152.70p +5.31%Hochschild Mining (HOC) 252.50p +4.73%Brown (N.) Group (BWNG) 439.10p +4.52%Spirent Communications (SPT) 128.00p +4.32%Centamin (DI) (CEY) 38.96p +3.73%Fenner (FENR) 367.90p +3.63%Lonmin (LMI) 270.20p +3.52%Chemring Group (CHG) 268.20p +3.07%FTSE 250 - FallersComputacenter (CCC) 465.00p -13.57%Kier Group (KIE) 1,174.00p -7.19%Tullett Prebon (TLPR) 241.10p -5.00%National Express Group (NEX) 193.30p -3.59%Man Group (EMG) 104.80p -3.05%Balfour Beatty (BBY) 246.40p -3.03%SDL (SDL) 375.80p -2.79%Intu Properties (INTU) 335.70p -2.33%Ashtead Group (AHT) 591.50p -2.07%IP Group (IPO) 149.00p -1.97%BC