London midday: Deutsche Bank woes weigh on banking sector
London stocks declined as worries about Deutsche Bank weighed on the banking sector.
Deutsche Bank was under the cosh following reports that some hedge funds had withdrawn money in the wake of its legal troubles in the US and concerns about its finances.
The lender’s chief executive John Cryan has emailed his 100,000 staff to reassure them that the German company’s finances are strong.
Shares in FTSE 100-listed banks Barclays, Lloyds Banking Group and Royal Bank of Scotland declined. RBS was also lower after announcing its proposals to regroup its businesses and separate its essential banking services from investment banking, in order to comply with UK ring-fencing legislation.
German lender Commerzbank was in the red after saying it will slash jobs on Thursday and announcing a plan to cut its dividend.
Closer to home, UK gross domestic product in the second quarter was revised higher by the Office for National Statistics. GDP rose 0.7% rose in the three months to the end of June, up from a previous estimate of 0.6%.On the year, however, the economy grew 2.1%, down from the previous estimate of 2.2%.
Howard Archer, chief UK and European economist at IHS, said: “News that services output grew 0.4% month-on-month in July in the immediate aftermath of the Brexit vote is a significant boost to third quarter growth prospects; consequently we are lifting our third quarter growth estimate to 0.4% quarter-on-quarter from 0.3%.”
A separate report from Nationwide showed UK house price growth eased in September amid worries about the impact of Brexit on the market. House prices rose 0.3% month-on-month in September to an average of £206,015 following a 0.6% increase in August. On an annualised basis, house prices grew 5.3% this month after a 5.6% gain in August.
Consumer confidence in the UK recovered sharply in September, picking back up to the levels seen before the referendum vote, GfK revealed. GfK's gauge of consumer sentiment rose from -7 points in August to -1 in September, versus economists' forecasts for a reading of -5.
In the eurozone, inflation doubled in September to 0.4%, in line with expectations, as the impact of weaker energy prices began to fade. Core inflation, which excludes unprocessed food and energy, was stable at 0.8% versus expectations of a nudge higher to 0.9%.
The eurozone unemployment rate was steady compared to the previous month at 10.1% in August. This was a touch weaker than expectations for it to nudge down to 10%, but it remained at the lowest rate recorded in the bloc since July 2011.
In Asia, a private gauge of China manufacturing showed a further expansion in September activity. Caixin’s purchasing managers’ index increased to 50.1 in September from 50.0 in August, above the 50 level that separates an expansion from a contraction.
Japan’s consumer price index fell 0.5% year-on-year in August, in line with forecasts, compared to a 0.4% drop in July.
Meanwhile, oil prices declined as scepticism grew over OPEC’s agreement to limit production. Brent crude dropped 1.5% to $48.47 per barrel and West Texas Intermediate slid 1.05% to $47.33 per barrel at 1203 BST.
On the corporate front, Burberry rallied after RBC Capital Markets upgraded the stock to ‘sector perform’ from ‘underperform’ and lifted the price target to 1,400p from 1,200p as it upped its earnings per share forecasts, largely due to a bigger FX tailwind.
Capita shares continued to fall a day after warning that full year profits will be some way short of current forecasts.
Market Movers
FTSE 100 (UKX) 6,847.89 -1.03%
FTSE 250 (MCX) 17,700.01 -0.92%
techMARK (TASX) 3,459.72 -1.07%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 8,025.00p 1.78%
Fresnillo (FRES) 1,842.00p 1.77%
Burberry Group (BRBY) 1,375.00p 1.63%
DCC (DCC) 6,955.00p 0.36%
InterContinental Hotels Group (IHG) 3,137.00p 0.35%
Reckitt Benckiser Group (RB.) 7,226.00p 0.29%
Wolseley (WOS) 4,312.00p 0.09%
Royal Mail (RMG) 483.10p 0.06%
SABMiller (SAB) 4,494.50p -0.01%
Smith & Nephew (SN.) 1,237.00p -0.08%
FTSE 100 - Fallers
Capita (CPI) 663.50p -4.94%
Barclays (BARC) 161.85p -3.26%
Aviva (AV.) 431.20p -2.82%
Prudential (PRU) 1,354.00p -2.62%
Lloyds Banking Group (LLOY) 54.05p -2.60%
Babcock International Group (BAB) 1,020.00p -2.49%
BT Group (BT.A) 382.10p -2.35%
Merlin Entertainments (MERL) 432.00p -2.28%
London Stock Exchange Group (LSE) 2,774.00p -2.08%
Sky (SKY) 892.50p -1.98%
FTSE 250 - Risers
Serco Group (SRP) 133.00p 1.99%
Hochschild Mining (HOC) 300.40p 1.69%
Entertainment One Limited (ETO) 216.70p 1.69%
Amec Foster Wheeler (AMFW) 577.50p 1.58%
Petrofac Ltd. (PFC) 893.00p 1.53%
Wood Group (John) (WG.) 765.00p 1.26%
Domino's Pizza Group (DOM) 367.40p 1.18%
Centamin (DI) (CEY) 151.10p 1.14%
JPMorgan Indian Investment Trust (JII) 630.50p 1.04%
Hunting (HTG) 454.10p 0.91%
FTSE 250 - Fallers
OneSavings Bank (OSB) 250.90p -4.82%
Aldermore Group (ALD) 162.30p -4.25%
Shawbrook Group (SHAW) 230.60p -3.84%
Virgin Money Holdings (UK) (VM.) 304.50p -3.52%
Daejan Holdings (DJAN) 5,545.00p -3.23%
Countryside Properties (CSP) 235.10p -3.01%
CMC Markets (CMCX) 198.40p -2.98%
Essentra (ESNT) 475.80p -2.94%
Drax Group (DRX) 307.20p -2.91%
Regus (RGU) 256.20p -2.88%