London midday: Stocks pull back ahead of rate decisions, US jobs report

3rd Apr 2013 11:49

Sharp falls in the mining sector and a number of heavyweight stocks going ex-dividend ensured that London markets were firmly in negative territory on Wednesday morning, with investors scaling back risk ahead of some key events later this week."With three major central bank meetings taking place on Thursday and the US jobs report due to be released on Friday, it's no surprise that we're seeing some risk aversion in the markets this morning," said Market Analyst Craig Erlam from Alpari.Both the Bank of England and European Central Bank (ECB) are due to release their monetary policy decisions on Thursday afternoon. While both parties are expected to stand pat, investors will be watching the press conference with ECB President Mario Draghi closely for any hints of a rate cut some time in the future.Meanwhile, the Bank of Japan's policy decision overnight will be monitored and is expected to see incoming Governor Haruhiko Kuroda unveil some aggressive easing measures. This move has been expected for some months now so markets are waiting to see if Kuroda can live up to expectations.On Friday, the March employment report from the States isn't expected to be as exciting as February release, which showed an unexpected drop in the jobless rate and a whopping 236,000 increase in non-farm payrolls. Consensus estimates point to a further 199,000 rise in non-farm payrolls for March, though the unemployment rate is forecast to remain at 7.7%.UK construction PMI disappointsA disappointing reading of activity in the UK construction sector weighed on sentiment in morning trade. The construction purchasing managers' index (PMI) came in at 47.2 in March, up from 46.8 the month before but below the 48 consensus forecast."The construction PMI has suggested contracting activity for the fifth month running now. Together with the weak showing of the manufacturing PMI yesterday this survey reinforces our view of the weakness of activity during Q1," said Barclays Research analyst Blerina Uruci.Traders were shrugging off upbeat readings of the services sector in China this morning: the government's official non-manufacturing PMI showed a rise to 55.6 in March from February's 54.5 reading; while HSBC's own services PMI jumped to its highest level since last May, rising to 54.3 from the prior 52.1.FTSE 100: Ex-div stocks and miners provide a drag, Vedanta bucks the trendStandard Life was a heavy faller this morning after going ex-dividend, with investors now unable to get their hands on the insurer's final and special payout for 2012. Other ex-div stocks trading lower this morning included Hammerson, Pearson and RSA Insurance.Mining stocks were also in negative territory as metals prices slipped, with EVRAZ, ENRC, Fresnillo, Rio Tinto, Randgold, Polymetal and Anglo American all among the worst performers. Credit Suisse also put a dampener on share prices in the sector today after cutting target prices for several stocks. The broker said: "Despite more restrained spending, 2013/14 will be a period of price discovery, as markets move into surplus and the sector lives through the over-spend of prior years. We see downside risk to prices in H213 and this remains a challenging investment backdrop in the short run."Vedanta however was making decent gains as investors welcomed the decision by India to grant the company an appeal over the closure of its copper smelter in Tuticorin, Tamil Nadu.Asset manager Schroders was performing well after Credit Suisse said that fund flow data for the UK mutual fund market showed equity inflows accelerating in February to their highest level in almost two years.Babcock, the UK engineering firm, was subdued despite saying that annual results will show "strong progress" on the previous year. The upbeat statement was being outweighed by a downgrade from Westhouse Securities from 'add' to 'neutral'.Vodafone was pulling back after its surge yesterday following Verizon's denial of a bid for the British telecoms firm. The Financial Times said yesterday that Verizon and AT&T were mulling a break-up bid of Vodafone at a 40% premium to current prices, causing shares to jump.ARM Holdings, the tech firm that designs chips for gadgets, edged higher after The Wall Street Journal reported that Apple could begin producing a new iPhone this quarter.