By Carla Mozee, MarketWatch U.K. manufacturing sector
expands
LONDON (MarketWatch) -- U.K. stocks were pulled lower Monday,
led by losses for the mining group after disappointing Chinese data
and by a continued rout in oil companies, on the heels of last
week's inaction by the Organization of the Petroleum Exporting
Countries.
Oil stocks were taking another beating as U.S. crude-oil futures
(CLF5) were pushed below $65 a barrel early Monday. Oil futures
have been diving since Thursday, when the OPEC failed to agree to
an output cut.
The FTSE 100 dropped 1% to 6,648.39, with basic materials down
nearly 2% after two measures of manufacturing activity in China --
a key buyer of commodities -- indicated a loss in momentum in
November, underscoring slowing growth in China's economy. HSBC said
its China purchasing managers index fell to a six-month low of
50.0, from 50.4 in October. Meanwhile, China's officials PMI fell
to 50.3 from 50.8 in October, the lowest level since March.
As for the pound (GBPUSD).the currency gained ground following
data showing the U.K. manufacturing sector expanded in November.
The pound sterling bought $1.5702 compared with $1.5683 ahead of
the data.
Markit and the Chartered Institute of Procurement & Supply
said their manufacturing purchasing manufacturers index rose to a
four-month high of 53.5 in November, up from 53.3 in October.
Analysts had widely expected a reading of 53.0 for the most recent
month.
"The domestic market is this month's stimulus of growth,
supporting continued stability and a good level of confidence,"
said David Noble, group chief executive at CIPS, in a statement
"Though progress is not as robust as in the first half of the year,
balance is being restored as output, orders and employment levels
all rise at moderate if unexciting rates."
The manufacturing report came ahead of Wednesday's Autumn
Statement, to be delivered by Treasury chief George Osborne
"against a background of a recovering U.K. economy, but a continued
deterioration in the fiscal position," said Ian Williams, economist
at Peel Hunt, in a Monday note. Net borrowing by the government is
running ahead of forecasts, and higher than last year's level,
largely because of a shortfall in tax receipts as wage growth lags
broader improvement in activity," wrote Williams.
Among losses in the mining sector, BHP Billiton PLC (BHP)
declined 2.4% and Randgold Resources Ltd. dropped 1.1%. Anglo
American PLC lost 2.1%, while Antofagasta PLC fell 1.8%.
Tullow Oil PLC dropped the most on the FTSE 100, losing 7.4%,
and energy engineering firm Weir Group PLC lost 5.2%.
Shares of BG Group PLC fell 3.4%. Also on Monday, the oil and
gas services provider has decided to cut the planned pay package
for incoming chief executive Helge Lund by roughly 53% to about 4.7
million pounds ($7.35 million). The move comes after shareholders
pushed back on the size of the compensation deal.
Off the main index, shares of Balfour Beatty PLC jumped 4%
following a Sunday Times report that John Laing Infrastructure Fund
is considering a GBP1 billion bid for the construction company's
investment arm.
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