LONDON (ShareCast) - A series of worse-than-expected economic indicators from China is expected to dampen markets on Monday morning, as stocks pull back from decent gains made before the weekend.

City sources predict the FTSE 100 will open down eight points from yesterday's close of 6,412.

Markets across Europe and in the US finished firmly higher on Friday after a worse-than-expected reading of US non-farm payrolls eased concerns that the Federal Reserve would soon begin to scale back stimulus.

"While the Friday payrolls report, along with last week’s weaker US data seems to have put paid to any prospect of Fed tapering before the September meeting, the residual effects of speculation about it are likely to linger for weeks and months ahead," said Senior Market Analyst Michael Hewson from CMC Markets.

Chinese data disappoints

Consumer price inflation in China slowed to an annual rate of 2.1% in May, from 2.4% the month before. Given that the consensus forecast was for a pick-up to 2.5%, the slowdown points to continued weak demand, analysts say.

These concerns were compounded by bank lending figures which showed that that banks gave out just 667.4bn yuan in new loans last month, down from 792.9bn yuan in April and well below the 815bn yuan expected.
 
Meanwhile, industrial production rose at a year-on-year rate of 9.2% in May, slightly below the 9.3% increase the month before. Analysts were expected an improvement of 9.4%.

Stocks to watch

Water group Severn Trent will be in focus today after rejecting the latest takeover proposal from international consortium LongRiver Partners at 2,200p per share. The firm argues that the 20.5% premium to its share price before the announcement of the initial approach "fail[s] to reflect the significant long-term value of Severn Trent or to recognise its future potential." However, according to The Times this morning, LongRiver could walk away from the deal.

AMEC, the engineering and project management firm, said on Monday that it has been awarded an two-year extension to a contract with natural gas giant BG Group worth £110m. The contract, which sees AMEC provides engineering, procurement, construction, commissioning and project management support for all of  BG Group's facilities in the central North Sea, will now run through to December 2015. The original contract, for three years, was awarded in 2011.

Precious metals producer Polymetal has signed two export sales contracts with Chinese off-takers for a volume of up to 50,000 tonnes of refractory gold concentrate produced at the Mayskoye gold project. "Entering into multiple off-take contracts for Mayskoye is an important achievement for Polymetal" said Chief Executive Officer Vitaly Nesis. "It will allow us to start generating free cash flows at our newest mine in Q3 and removes one of the key uncertainties for the Albazino expansion project."

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