London shares pared some of their gains on Thursday as traders digested mixed European manufacturing figures.
The FTSE 100 Index, which had risen more than 100 points in earlier trading, was 46.5 points ahead at 6108 by lunchtime.
Manufacturing purchasing managers' index (PMI) data for September presented a mixed picture across the UK and the continent.
In Britain, the PMI figure dropped to 51.5, slightly above a forecast of 51.3 but hitting a three-month low.
Analysts said the data showed manufacturers were still struggling and the UK economy remains dependent on the services industry.
Deputy chief economist at the Engineering Employers Federation (EEF), Zach Witton, said: "Today’s data suggests the challenging export environment and weak demand for investment goods in the oil & gas sector has started to take a toll on business confidence, especially the fact manufacturing jobs posted losses for the first time in more than two years.
"There are also signs that domestic demand driven by consumers – a recent key supporter of the PMI - is coming off the boil, with consumer goods producers seeing a substantial slowdown in output growth. Overall, until we see an improvement in export markets, manufacturing will remain under pressure.”
Howard Archer at IHS Global Insight said the data showed a case for the Bank of England to hold off from any interest rate hike until well into 2016.
Overall PMI figures for the Eurozone came in at 52.0, down from 52.3 in August, with any figure above 50 indicating expansion. France returned to growth, leaving only Greece in contraction. UK September manufacturing PMI dropped to 51.5, slightly above a forecast of 51.3.
Germany's Dax lost hold of gains after the data, falling 50 points. France's CAC-40 was five points up.
Archer added: "Marginally softer Eurozone manufacturing expansion in September, according to the PMI, indicates that the eurozone’s modest cyclical upturn is continuing but failing to kick on."
Markets had risen earlier after Chinese manufacturing PMI numbers rose unexpectedly in September.
The PMI showed a reading of 49.8, while the estimates were to remain stable at 49.7, representing the first increase after three months of consecutive declines.
Chief market strategist at ADS Securities, Noureldeen Al-Hammoury, noted that the index remained below the 50 key level, but said the surprise figure had eased fears about a faster slowdown, keeping market sentiment positive.
On the corporate front, oil giants were up on rising crude prices. BP (LON:BP.) gained 9.25p to 343.4p and Royal Dutch Shell (LON:RDSB) increased 38p to 1601p as the price of a barrel of Brent crude rose 1.3% to US$49.01.
Meat producer Cranswick (LON:CWK) sizzled 39p to 1635p after first-half revenue came in slightly above its expectations.
Shares in US miner Atlantic Coal (LON:ATC) ticked up 0.02p or 14.4% to 0.15p on news of an "excellent" third quarter for production and sales, helped by buoyant anthracite prices.
Caza Oil & Gas (LON:CAZA) fell 0.78p to 0.72p after saying it was at an advanced stage of talks over a potential equity financing.
Ortac Resources (LON:OTC) lifted by more than half, up 0.02p at 0.07p, as it said Zambian copper explorer Zamsort, in which it had acquired secured convertible loan notes, had raised a further US$2mln from Kopara Investments.
MARKET PREVIEW
London’s blue-chip stocks are set for a positive start to Thursday as encouraging economic stats in America boosts sentiment in equity markets.
Wall Street’s Dow Jones had added some 235 points, 1.47%, by Wednesday’s close after American private company jobs figures were better than expected, which gave confidence ahead of potential pivotal non-farm payrolls for September.
The S&P 500 gained just shy of 36 points, or 1.9%, to 1,920 while the Nasdaq moved 2.3% higher to 4,620.
Positive sentiment rolled over into Asia where Japan’s Nikkei climbed more than 400 points, 2.4%, to 17,802 and Hong Kong’s Hang Seng gained 1.4% to 20,846.
Also rising was the Shanghai Composite which added 0.48% to 3,052.
Australia’s ASX 200 was 90 points or 1.8% higher at 5,111.
In London, at 7:00 am, IG Markets called the FTSE 100 some 88 points to the good at 6,138 to 6,140.
Elsewhere, CMC Market’s analyst Michael Hewson described the last quarter as one that investors would prefer to forget.
“The big question now is whether yesterday’s rebound is a harbinger of a change in sentiment or merely a “dead cat” bounce? Today’s open suggests the rebound has some legs,” he said in a note.