London's top-flight shares pared early gains as UK manufacturing data spoilt an Asia-inspired party.
The FTSE 100 Index lost hold of a 25-point gain to stand 7.9 points ahead at 6732.29, although the FTSE 250 Index increased 57 points and small-cap indices were also on the up.
The gains came after a positive session in Far East markets, in which the Japanese yen pulled back from its post-Bank of Japan show of strength, boosting the Nikkei index.
But UK IHS Markit manufacturing PMI data for July predictably missed expectations, coming in at 48.2 against an estimate of 49.1 and June's figure of 52.4, its lowest level since early 2013.
Employment in the sector fell for the seventh straight month in July and the rate of job losses was the second sharpest for almost three-and-a-half years.
Samuel Tombs at Pantheon Macroeconomics said: "The collapse in the total orders balance to 48.3 from 56.3 in June signals that support from the weaker pound simply is not powerful enough to offset slumping domestic demand."
Miners led blue-chips higher, with Anglo American PLC (LON:AAL) advancing 3.5% to 859.6p and BHP Billiton (LON:BLT) progressing 3% to 973.1p. Despite a US$1bn dollar hit following the Samarco dam disaster, Billiton revealed US$500mln in cost savings last week.
Morrison Supermarkets (LON:MRW) was among the biggest losers, down 2.2% to 181.7p. Supermarkets on the whole are suffering as consumer confidence was battered by the Brexit vote. Today Morrison's revealed its latest price cutting spree to head off the competition.
In small-cap territory, Ascent Resources PLC (LON:AST) ascended 53% to 1.3p after signing conditional agreements necessary to allow commercial gas production to start as early as January 2017 in Slovenia.
Europa Oil & Gas (Holdings) PLC (LON:EOG) spurted 10.5% to 5.25p as the oil & gas explorer and producer provided detailed technical information on the recently awarded licensing options 16/20 and 16/21.
But Real Good Food PLC (LON:RGD) sank 12.7% to 31p on unappetising full-year results.
Shares in European non-life insurer Gable Holdings Inc. (LON:GAH) fell 11.5% to 2.875p as non-executive director and remuneration committee chairman Andrew Trott resigned.
Preview at 6.57am
The FTSE 100 looks set to open higher with UK investors set to ignore another batch of less than inspiring economic data from China overnight.
The index of blue chip should advance around 30 points to 6,754.43, according to the spread betting firms.
The picture was mixed overnight, with Shanghai Composite down around 1.2% after manufacturing data underwhelmed.
The official purchasing manager’s index showed a reading of 49.9, which was slightly below forecast; but more importantly it revealed the sector shrank in July. Any figure below 50 denotes contraction.
Meanwhile, a private survey of small and medium sized businesses showed signs of growth – but only just as it came in at 50.6.
Japan’s Nikkei, Hong Kong’s Hangs Seng and the ASX in Australia withstood the fallout from China, posting gains respectively of 0.2%, 1.4% and 0.5%.
Here in the UK manufacturing data could also shape sentiment with the first significant batch expected later today.
Analysts say it will provide a further guide to how the Brexit vote has affected business confidence.
In June the figure fell 49.1 from 52.1. But CMC Markets analyst Michael Hewson said: “There is a chance that we could see this revised higher given that the flash number was taken at a time when political uncertainty was at elevated levels.
“This is no longer the case and this might be reflected in a slightly improved number.”
On the corporate front we are expecting another deluge of earnings from the big boys led by the hotelier IHG, insurer Direct Line and the London Stock Exchange.
*Brent Crude 10 cents higher at US$43.63 a barrel.
*Gold up US$7.70 per ounce at US$1,356.70.
*Pound worth US$1.3249
City Headlines
*Goldman Sachs has been asked to give details of any paid work it has done for Tina Green, as MPs continue to question the bank’s involvement in her husband’s decision to sell BHS for £1, a year before the failure of the high street chain.
*Royal Bank of Scotland’s weak performance in European stress tests has delayed its chances of paying dividends, analysts believe – FT.
*Uber is preparing to pour US$500 million into an ambitious global mapping project as it seeks to wean itself off dependence on Google Maps and pave the way for driverless cars – FT.
*Aldi’s rampant underlying sales growth has come to a halt during the past quarter and may even have gone backwards in the first sign that the German discounter’s phenomenal momentum is faltering – Times.
*Opec’s worst fears are coming true. Twenty months after Saudi Arabia took the fateful decision to flood world markets with oil, it has failed to break the back of the US shale industry – Telegraph.
*The UK economy will narrowly avoid a contraction in the third quarter as “resilient” businesses seek to “move forward” after the Brexit vote, a survey shows – Telegraph.