LONDON (Alliance News) - Stocks continued to fall at midday on concerns over rising US bond yields, presenting a sizable event risk, as
Intu Properties surged following news of a possible takeover from its major shareholder."Stocks are firmly in the red as investors are worried about rising US government bond yields, emerging market economies, and Italy's political situation. The rise in US yields could put additional pressure on emerging economies, and the US non-farm payrolls report later today could drive yields even higher if we see a positive update," said David Madden, market analyst at CMC Markets UK. Madden added: "The Italian government are holding their nerve and are determined to disobey Brussels, and pursue increased government spending in a bid to boost economic activity. The political rumbling regarding Italy might spark another round of the Italian debt crisis."The FTSE 100 was down 0.6%, or 45.31 points, at 7,373.03 at midday. The FTSE 250 shed 0.6%, or 117.52 points, at 19,971.18 while the AIM All-Share was 0.7% lower at 1,073.68.The Cboe UK 100 was down 1.1% at 12,615.31. The Cboe UK 250 was 0.8% lower at 18,269.34 and the Cboe UK Small Companies down 0.1% at 12,126.43.Wall Street is on course to follow Europe's lead, with the Dow Jones called marginally lower, the S&P 500 flat and the Nasdaq Composite set to shed 0.1%.The focus in the US will be on unemployment and non-farm payrolls, out at 1330 BST."The main theme this week for markets is the rise in US yields with solid jobs and bumper service sector figures on Wednesday pushing bonds down further with the 10-year hitting its lowest level since 2011," said David Cheetham, chief market analyst at XTB Trading. Cheethem added: "This afternoon's non-farm payrolls is the most widely viewed employment figure around the globe and another strong release could push yields even higher, supporting the buck and posing a threat to stock markets. "There was sizable selling seen across all major stock benchmarks yesterday but the US recovered a little into the closing bell and today's moves following the jobs data could well set the tone for the markets for the rest of the month." In London's blue chip index at midday, inspection and testing firm
Intertek was 0.6% higher as Berenberg raised its rating to Buy from Hold. At the other end of the FTSE 100,
Antofagasta was the worst performer, down 4.8%. Goldman Sachs has cut its stock rating to Sell from Neutral.
Royal Mail was down 3.3% at midday as Citigroup cut its rating to Sell from Neutral.Consumer goods giant
Unilever was down 0.5% as it cancelled plans to simplify the company's dual-headed structure, citing a lack of support from shareholders. The Anglo-Dutch company, behind brands such as Hellmann's mayonnaise and Dove soap, said that a lack of support from "a significant group of shareholders" made it "appropriate" to withdraw from the plan, which would have involved uniting the company as a single Dutch entity and moving headquarters to Netherlands from the UK.
Rio Tinto was trailing 3.1% as it opened a new mine at Hope Downs with its joint venture partner, Hancock Prospecting. The joint venture partners have also approved an investment in improved automation at the project. Development of the Baby Hope deposit in Western Australia is intended to sustain the capacity at the Hope Downs 1 operation. In the FTSE 250, Intu Properties gained 27% on news major shareholder Peel Group, alongside Olayan and Brookfield Property, are considering a possible cash offer for the remaining shares in Intu they do not already own. Peel and Olayan currently hold just shy of 30% of Intu's shares, they said, with Brookfield holding none. Peel's Executive Chairman John Whittaker is also deputy chairman of Intu. Intu has formed a committee, made up of all directors, except Whittaker, to consider any approach.
Bodycote, was 1.9% higher on HSBC has raised its rating for the heat treatment services firm to Buy from Hold.Dragging the FTSE 250 down was gold miner
Centamin, down 11.7%. The firm reported a 27% quarter-on-quarter increase in gold output in the three months to September to 117,720 ounces.On a year-on-year basis, gold production fell 25%. The Egyptian miner, which operates the Sukari mine, said September was a strong month but operational improvements "have taken longer than planned to materialise". Looking to the last quarter of the year, Centamin expects improvements to continue and for production for the three months to December to be around 145,000 ounces of gold. This would give annual production of 480,000 ounces, versus 544,658 ounces in 2017.
CYBG was down 3.2% as Societe Generale initiated the bank with a Sell rating.The pound was quoted at USD1.3036 at midday, compared to USD1.3024 late Thursday.Closer to home, UK house prices dropped unexpectedly in September, data from the Lloyds bank subsidiary Halifax and IHS Markit showed.House prices decreased 1.4% in September from August, confounding expectations for an increase of 0.2%. This was also much bigger than the 0.2% drop posted in August.In three months to September, house price growth eased to 2.5% annually from 3.7% in three months to August.On a quarterly basis, house prices gained 1.8% in July to September period."The annual rate of growth is near the top of our forecast range of 0-3% for 2018, as a low supply of new homes and existing properties for sale, combined with historically low mortgage rates and a high employment rate, continue to support house prices," Russell Galley, managing director at Halifax, said.Over in mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were down 0.5% and 0.6% respectively.The euro continued to slip Friday to USD1.1493 against USD1.1515 at Thursday close.Germany's factory orders rebounded in August as the decline in domestic demand was fully offset by robust foreign demand.Factory orders grew a more-than-expected 2% month-on-month in August, reversing a 0.9% drop in July, figures published by Destatis revealed Friday. Orders were forecast to rise 0.8%.Domestic orders fell 2.9%, while foreign orders increased 5.8% in August on the previous month.Within foreign demand, new orders from the euro area were down 2.2%, but orders from other countries increased 11.1%.The economy ministry said the strong increase in orders from non-European countries proves that German industrial products continue to be in demand worldwide, regardless of trade conflicts.Germany's producer prices increased at the fastest pace in 11 months in August, figures from Destatis showed.Producer prices advanced 3.1% year-on-year in August, following a 2.9% increase logged in July.Economists had forecast prices to climb again by 2.9%. The latest growth was the fastest since September 2017, when prices grew 3.2%.
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