London FTSE 100 drops on weak European data

The benchmark FTSE 100 index lost 0.36 percent to 6,800.56 points
The benchmark FTSE 100 index lost 0.36 percent to 6,800.56 points (AFP Photo/Leon Neal)

London (AFP) - London's stock market slipped into negative territory on Monday as nervy investors reacted to a shock fall in eurozone business activity that offset positive news for Chinese manufacturing, analysts said.

The benchmark FTSE 100 index lost 0.36 percent to 6,800.56 points, while Frankfurt's DAX 30 fell 0.66 percent to 9,920.92 points and the CAC 40 in Paris slumped 0.57 percent to 4,515.57 points compared with Friday's closing levels.

"Stocks in Europe were weak from the offset today as any hopes of a bounce from positive Chinese data were soon undone by concerns over Iraq and missed expectations for European services and manufacturing data," said Jasper Lawler, an analyst at CMC Markets.

Eurozone business activity slipped for the second month running in June, suggesting a modest recovery could be stalling, according to a closely watched survey.

Markit Economics said its Eurozone Composite Purchasing Managers Index (PMI) for June, a leading indicator of overall economic activity, slipped to 52.8 points from 53.5 in May, coming in at the weakest level since December.

The downbeat survey took the shine of positive news from Asia as HSBC said its purchasing managers index of Chinese manufacturing came in at 50.8 this month, up from a final reading of 49.4 in May.

The latest figure is the first time the reading has come in above 50 since December.

A decision by South African platinum mine workers' union to end their protracted strike also saw traders flock towards mining stocks.

Intercontinental Hotels topped the FTSE 100 leaderboard with takeover speculation pushing shares in the chain up 2.73 percent to close at 2,368 pence.

BG Group was also in demand and shares in the energy provider was up 2.50 percent to close at 1,270 pence.

Rolls Royce was the biggest faller, down 2.95 percent to 1,053 pence, traders said.

Johnson Matthey was also under heavy-selling pressure with the chemicals group down 2.74 percent at 3,015 pence, traders told AFP.

Lloyds Banking Group (LBG) was the day's most traded stock with 73.42 million shares changing hands, followed by Vodafone Group with 44.46 million.

On the foreign exchange markets, sterling inched up to to $1.7014 at 5.17 pm from $1.7013 late Friday, while it also gained ground on the single European currency where it was trading at 1.2517 euros from 1.2509 over the same period.