London pre-open: Chinese data to dampen the mood

23rd Nov 2011 07:21

The Footsie is expected to be hit by another wave of selling on Wednesday, its eighth in a row, with City sources predicting the index to open at around 5,156, almost 1% down from yesterday's close of 5,207. The blue chips have lost an average of 6% since Friday 11 November when the FTSE 100 stood at 5,545.Weighing on sentiment today will likely be the poor data out from China, which showed factory activity levels dropping to their lowest in 32 months. The HSBC flash manufacturing purchasing managers' index (PMI), measuring industrial activity in China, fell to 48 this month, from 51 in October. A measure below 50 indicates contraction.On a more positive note, the International Monetary Fund yesterday rolled out two new credit facilities for its member countries aimed at helping them to counteract fears of financial contagion. Initial market reaction to that decision however appears to have been rather tepid. In company news, mining giant Rio Tinto has received clearance for its offer to purchase Hathor Exploration for C$4.70 a share, in a bid which values Hathor at around C$654m (£402m) on a fully-diluted basis. The company said that the Canadian Competition Bureau's Commissioner of Competition issued a "no action letter" and Hathor shareholders now have until 17:00 on 30 November to accept and tender their common shares.Engineering group Weir is to buy US wellhead solutions provider Seaboard Holdings for $675m (£431m). Weir said the consideration will be payable in cash on completion and will be funded from new and existing bank facilities. "Seaboard is a well-managed business, with a strong position in a market that we understand well. The acquisition is perfectly in line with strategy," said chief executive Keith Cochrane.Contract caterer Compass saw revenues rise by 9.4% to £15.8bn in the year ended 30 September and achieved organic growth of 5.4% after excluding the impact of acquisitions and disposals. Despite a £15m profit impact due to the Japanese earthquake and a further £15m in higher-than-normal restructuring costs, underlying operating profit rose by 9%. "Whilst we are not immune from economic reality, the fundamentals of the business remain strong and our flexible cost base will enable us to respond quickly to any changes in economic conditions," said chief executive Richard Cousins.