London midday: Stocks fall despite retail data and stimulus hopes

16th Aug 2012 11:46

- UK retail sales beat estimates in July- Investors eye US data- Chinese stimulus hopes increaseAfter a pretty subdued start, the Footsie had fallen further into the red by Thursday lunchtime in spite of some better-than-expected UK retail sales data.Sales volumes rose by 0.3% during July, up 2.8% on an annual basis, according to the latest data from the Office for National Statistics (ONS). The market consensus was looking for a change of -0.1% and 1.4%, respectively. The July trading period covered just two days when the Olympics Games had begun in London (July 27th and 28th). However, the ONS said: "Feedback from retailers suggests that there has been no impact on sales from the Games in this trading period." Attention now turns to the US, where house-building stats out this afternoon will give an indication of the state of the US housing market, which has a knock-on effect on consumer sentiment. Economists expect starts will have slipped to an annualised figure of 732,000 from 760,000 in June. Investors will also be keeping an eye on the manufacturing report from the Federal Reserve Bank of Philadelphia after yesterday's disappointing manufacturing update from the New York Fed. Economists are expecting Philly manufacturing activity to have contracted in July, but the forecast index reading of -4.0 would at least represent an improvement on June's reading of -12.9.Also in focus today was the news of slowing inward investment in China in July. Foreign direct investment in China fell 8.7% to a two-year low of $7.58bn last month. Yesterday, Chinese Premier Wen Jiabao said that he sees "growing room for monetary policy operation" as inflation slows down. Company movers: ABG jumps on takeover speculation African Barrick Gold (ABG) surged this morning after announcing that its holding company, Barrick Gold, is in talks with China National Gold Group about the possibility of selling its stake in the FTSE 250 miner to China's largest gold producer. Should China Gold buy up more than 30% of the voting interest in ABG from Barrick Gold, it would then be required to make an offer for the whole of ABG's issued ordinary share capital. The mining sector was broadly higher this morning on hopes that potential stimulus measures in China would boost the demand for commodities. Evraz, Kazakhmys, Vedanta and Fresnillo were among the best performers. Banking peers Lloyds and RBS were also making decent gains.??Pharmaceuticals group Hikma was a high riser after first-half revenues rose 34.8%, helped by contributions from recent acquisitions. Organic revenue growth was still a solid 7.6%. ??Software specialist Micro Focus edged lower after revealing news of a 50p-a-share cash return and share consolidation. The firm also said that first-quarter financials were in line with expectations, with adjusted earnings flat year-on-year on a constant currency basis. Engineering support services firm Babcock was in the red after Espirito Santo downgraded its rating on the stock to 'neutral', while natural gas giant BG Group fell after Morgan Stanley cut its rating to 'equal weight'. ??Insurance groups Admiral and Prudential were off the pace in the morning session, with the latter being weighed down by comments from Nomura. The broker maintained its 'reduce' rating on the stock and cut its target price today, saying that the valuation is too high.Publishing group Reed Elsevier was in demand after announcing the appointment of Duncan Palmer as its Chief Financial Officer, having lured him away from US company Owens Corning. Palmer will take over from Mark Armour, who is retiring at the end of the year. FTSE 100 - RisersKazakhmys (KAZ) 730.00p +2.10%Lloyds Banking Group (LLOY) 32.57p +1.92%Vedanta Resources (VED) 936.50p +1.85%IMI (IMI) 900.50p +1.81%Weir Group (WEIR) 1,740.00p +1.75%Royal Bank of Scotland Group (RBS) 225.10p +1.58%Evraz (EVR) 266.40p +1.52%Fresnillo (FRES) 1,509.00p +1.34%Tesco (TSCO) 336.75p +1.25%Anglo American (AAL) 1,962.50p +1.19%FTSE 100 - FallersAdmiral Group (ADM) 1,157.00p -2.12%Carnival (CCL) 2,149.00p -1.92%Prudential (PRU) 808.00p -1.82%Pennon Group (PNN) 751.50p -1.64%Sage Group (SGE) 297.20p -1.62%Vodafone Group (VOD) 185.85p -1.54%ARM Holdings (ARM) 576.00p -1.37%BG Group (BG.) 1,303.50p -1.32%Capita (CPI) 729.50p -1.22%Bunzl (BNZL) 1,097.00p -1.17%FTSE 250 - RisersAfrican Barrick Gold (ABG) 433.50p +10.14%Hikma Pharmaceuticals (HIK) 755.50p +4.21%Avocet Mining (AVM) 92.00p +4.13%Ruspetro (RPO) 148.10p +3.64%Rank Group (RNK) 125.00p +3.31%Petra Diamonds Ltd.(DI) (PDL) 105.30p +3.24%Petropavlovsk (POG) 445.30p +2.89%New World Resources A Shares (NWR) 295.60p +2.60%Computacenter (CCC) 369.40p +2.47%NMC Health (NMC) 197.00p +2.18%FTSE 250 - FallersBalfour Beatty (BBY) 287.60p -2.87%Hochschild Mining (HOC) 422.40p -2.63%CSR (CSR) 325.00p -2.37%Dunelm Group (DNLM) 567.00p -2.24%Cable & Wireless Communications (CWC) 32.84p -2.03%Wetherspoon (J.D.) (JDW) 463.90p -2.01%WH Smith (SMWH) 565.50p -1.82%QinetiQ Group (QQ.) 165.30p -1.78%Howden Joinery Group (HWDN) 142.00p -1.73%Greggs (GRG) 497.50p -1.68%BC