London open: Stocks slump on Chinese manufacturing data

22nd Mar 2012 08:33

- Chinese data dampens sentiment- Randgold plummets on Malian troubles- Broker downgrades weigh on AMEC, REIT stocksThe Footsie sank in early trading on Thursday with the miners providing a drag after the release of more disappointing economic data from China. Chinese factory activity registered an even worse contraction in March as manufacturing hit a four-month low. The flash HSBC Manufacturing PMI for this month fell back to 48.1 from the 49.6 registered in February. This is its lowest level since last November. Readings below 50 imply a contraction. At the same time the China Manufacturing Output Index changed direction and registered a contraction of 47.9, compared to February's 50.2. Commenting on the Flash China Manufacturing PMI survey, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "Weakening domestic demand continued to weigh on growth, as indicated by a slowdown in new orders which came in at a four-month low. External demand remained in contraction territory, but the decline was at a slower pace, implying that there are no improvements in the demand outlook."Turning to the Eurozone, European Central Bank (ECB) President Mario Draghi said that the worst of the sovereign debt crisis has passed although the Eurozone governments need to take up the baton to deal with the risks that still exist. "The worst is over, but risks remain. The situation has stabilised," he said.RANDGOLD DROPS ON MALIAN DISRUPTIONSShares in Randgold Resources tumbled in early trading after a military coup in Mali sparked concerns that operations at its Loulo and Morila gold mines in the country may be disrupted. According to media reports, rebel troops have taken over state radio and television in Mali to announce that they have seized control of the country. Just last night, Randgold announced that it has established a new company, Gounkoto, to exploit its Gounkoto deposit at Loulo, in which it owns a 80% interest. Other miners were being weighed down by the gloomy Chinese manufacturing data, with markets worrying over the what this means for the demand for metals from the world's second-largest economy. Fresnillo, Rio Tinto, ENRC and Evraz were among the worst performers on the blue chip index.Meanwhile, stocks were reacting to yesterday's Budget announced by Chancellor of the Exchequer George Osborne. Pharmaceuticals titan GlaxoSmithKline has confirmed that it will invest £500m in the UK to build a new factory and create 1,000 new jobs. Osborne said he wanted to encourage investment in R&D and manufacturing by reducing the rate of corporation tax. Self-storage group Big Yellow dropped after saying that, as a result of Budget proposals, it may have to start charging VAT to its customers later on this year.Fashion retailer Next fell despite saying that the year to the end of January had finished well and 2011 and presented the retail sector with 'the perfect economic storm'. Meanwhile, sector peer Kingfisher was also down despite seeing sales and profits come in slightly ahead of expectations.United Utilities was one of the few risers after saying that it is on track to deliver a 'good' underlying financial performance for the year ended March 31st, and is on course to meet its regulatory outperformance targets.Industrial engineer AMEC was down after JP Morgan Cazenove cut its recommendation on the stock from overweight to neutral. Meanwhile, the REIT sector appears to have been taken down a notch by Espirito Santo which downgraded its ratings from buy to neutral for sector peers British Land, Hammerson, Land Securities, Shaftesbury, Great Portland Estates and Derwent London.Gem Diamonds was a heavy faller on the FTSE 250 after Citigroup downgraded its rating on the stock from buy to sell.BCFTSE 100 - RisersVodafone Group (VOD) 172.60p +0.76%AstraZeneca (AZN) 2,862.50p +0.39%Tate & Lyle (TATE) 707.50p +0.35%United Utilities Group (UU.) 612.00p +0.33%Rexam (REX) 424.50p +0.31%British Sky Broadcasting Group (BSY) 689.00p +0.22%Associated British Foods (ABF) 1,205.00p +0.17%Whitbread (WTB) 1,750.00p +0.17%WPP (WPP) 855.50p +0.12%GlaxoSmithKline (GSK) 1,425.50p +0.04%FTSE 100 - FallersRandgold Resources Ltd. (RRS) 5,730.00p -13.12%Man Group (EMG) 134.60p -2.82%Capital Shopping Centres Group (CSCG) 339.00p -2.81%Fresnillo (FRES) 1,691.00p -2.65%Vedanta Resources (VED) 1,321.00p -2.29%Anglo American (AAL) 2,448.00p -2.20%Rio Tinto (RIO) 3,362.00p -2.15%Amec (AMEC) 1,119.00p -2.10%BHP Billiton (BLT) 1,906.50p -2.08%Royal Bank of Scotland Group (RBS) 27.93p -2.07%FTSE 250 - RiserseasyJet (EZJ) 451.00p +1.62%Talvivaara Mining Company (TALV) 249.70p +1.55%Dixons Retail (DXNS) 19.02p +1.17%Stobart Group Ltd. (STOB) 132.40p +1.15%Spirit Pub Company (SPRT) 58.75p +0.86%Regus (RGU) 108.00p +0.84%Rightmove (RMV) 1,396.00p +0.72%Dunelm Group (DNLM) 505.50p +0.70%AZ Electronic Materials SA (DI) (AZEM) 293.80p +0.69%KCOM Group (KCOM) 68.55p +0.66%FTSE 250 - FallersAquarius Platinum Ltd. (AQP) 153.10p -4.13%Gem Diamonds Ltd. (DI) (GEMD) 298.00p -4.06%Big Yellow Group (BYG) 299.00p -3.55%Laird (LRD) 202.10p -3.35%Home Retail Group (HOME) 118.60p -3.18%Derwent London (DLN) 1,729.00p -3.14%Ferrexpo (FXPO) 312.00p -2.92%Hochschild Mining (HOC) 458.50p -2.72%Petropavlovsk (POG) 612.50p -2.70%Exillon Energy (EXI) 188.50p -2.68%