The Chinese slowdown and its impact on one of the world's biggest banks overshadowed the London market on Monday.
Chinese manufacturing fell for the eighth month in a row, hitting London shares early in the first session of the week.
The official manufacturing Purchasing Manager's Index (PMI) was unchanged at 49.8 in October, the third consecutive slightly sub-50 reading, with any sub-50 reading indicating contraction.
While the Caixin manufacturing PMI improved in October, the 1.1% increase still left it very firmly below the key-50 level, at 48.3, for the eighth consecutive month, and the official non-manufacturing PMI fell 0.3% to 53.1, its lowest level since December 2008.
From a broader point of view, the Chinese slowdown fuelled a 4% fall in revenue at HSBC (LON:HSBA), which was a top faller on the FTSE 100 Index after reporting third quarter results.
HSBC also said it was still considering whether to move its headquarters away from London amid concerns about higher taxes and the UK's potential exit from the EU. Shares dropped 5.5p to 502.1p.
Analyst Jasper Lawler said: "Shares are lower because the revenue drop confirms fears over the impact of the slowdown in Asia.
"The delay in HSBC’s decision over moving its headquarters adds an unnecessary source of uncertainty."
The FTSE 100 Index fell 23.87 points to 6,337 at lunchtime while Frankfurt's Dax and Paris's Cac-40 pared earlier losses on news that Eurozone manufacturing picked up modestly in October. British manufacturing numbers also showed the sector regaining momentum during the month.
On the corporate front, budget airline Ryanair (LON:RYA) also shrugged off losses to fly €0.35 higher to €13.84 after it forecast broadly flat third quarter average fares against last year, while fourth quarter fares would dip about 4%.
Shire (LON:SHP) backtracked 22p to 4903p as it bought hereditary US angioedema drug developer Dyax Corp for $5.9bln.
Telit Communications (LON:TCM) advanced 10p to 259p on news of two new automotive supply deals.
Aureus Mining (LON:AUE) ticked up 0.5p to 17.25p as it said processing had resumed at its New Liberty gold mine in Liberia with commercial production expected to be declared in January.
But Stellar Diamonds (LON:STEL) lost its sparkle by 20% to 0.3p on news that it was bringing in around £1.26mln net, via a convertible loan note agreement and subscription deal, for ongoing working capital, as it unveiled a big reorganisation of its shares.
Haydale Graphene Industries (LON:HAYD) softened 3p to 175.5p after flagging plans to raise £5.2mln from a placing of 3.51mln shares at 160p a pop.
LONDON OPEN
Chinese manufacturing fell for the eighth month in a row, hitting London shares early in the first session of the week.
The official manufacturing Purchasing Manager's Index (PMI) was unchanged at 49.8 in October, the third consecutive slightly sub-50 reading; a sub-50 reading indicates contraction.
While the Caixin manufacturing PMI improved in October, the 1.1% increase still left it very firmly below the key-50 level, at 48.3, for the eighth consecutive month, and the official non-manufacturing PMI fell 0.3% to 53.1, its lowest level since December 2008.
Analysts at Daiwa Capital Markets said in a note: "Among the key causes of concern, the price indices of the official and Caixin surveys alike continue to point to deflationary pressures ahead."
The FTSE 100 Index fell 25 points to 6,335 in early trading while Frankfurt's Dax and Paris's Cac-40 pared early losses on news that Eurozone manufacturing picked up modestly in October. British manufacturing numbers also showed the sector regaining momentum during the month.
On the corporate front, HSBC (LON:HSBA) fell 7.1p to 500.5p as the global banking group posted a 32% rise in third quarter profits, but took a hit from currency movements.
Budget airline Ryanair (LON:RYA) flew €0.15 lower to €13.34 after it forecast broadly flat third quarter average fares against last year, while fourth quarter fares would dip about 4%.
Telit Communications (LON:TCM) advanced 6p to 255p on news of two new automotive supply deals.
Aureus Mining (LON:AUE) ticked up 0.62p to 17.38p as it said processing had resumed at its New Liberty gold mine in Liberia with commercial production expected to be declared in January.
MARKET PREVIEW
The FTSE 100 is set to open its account for the week in the red, taking its cue from Asia.
The main markets in the east felt the pressure from China, which posted yet more lacklustre economic data.
The official Purchasing Manager’s Index registered a reading of 49.8. Anything below 50 means the manufacturing is contracting.
“While the weakness in the Chinese economy appears to be less of a worry to Federal Reserve officials than it was a couple of months ago, it doesn’t change the fact that investors remain concerned about weakness in China and the lacklustre nature of the recovery seen in Europe’s major economies,” said Michael Hewson of CMC Markets.
The Shanghai Composite fell 0.8%, dragging with it the Hong Kong’s Hang Seng (down 0.9%) and the Nikkei 225 in Japan (off 2.1%).
Here in the UK, the FTSE 100 is expected to open 41 points lower at 6,320.09.
Marks & Spencer is expected to be the pick of the results in what looks to be a busy week for corporate news.
Heavyweights Tate & Lyle, Associated British Foods, Imperial Tobacco and AstraZeneca are also slated to report.
Other markets….
Oil: Brent is 10 cents higher at US$49.57 a barrel.
Gold: The yellow metal is 80 cents lower than its Friday close at US$1,146 an ounce.
Currency: Cable is trading at US$1.532.