LONDON (ShareCast) - Stocks pulled back on Monday morning on the back of a series of gloomy figures from economic powerhouse China, with Severn Trent leading the FTSE 100 lower as its potential takeover is put at risk.

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.

Nevertheless, one bright spark this morning came from Japan where economic growth in the first quarter was revised up to an annual rate of 4.1%, ahead of the initial 3.5% estimate. A monetary policy announcement is due out from the Bank of Japan tomorrow.

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.

Year-on-year money supply growth eased from 16.1% to 15.8% in May, worse than the 15.9% expected.
 
Meanwhile, industrial production rose at an annual rate of 9.2% in May, slightly below the 9.3% increase the month before. Analysts were expected an improvement of 9.4%.

"Cleary such figures are a sharp reminder that China is still struggling to recover with the global economic downturn and there is still a way to go before investors’ confidence in the economic giant returns," said Financial Trader Shavaz Dhalla from Spreadex.

FTSE 100: Severn Trent sinks after latest bid rejection

Water group Severn Trent dropped this morning 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 fails to reflect its "significant long-term value" or future potential. However, a spokesman for the consortium said this morning that it would not make a further proposal for Severn Trent unless the UK firm engages in talks.

Mining stocks were under pressure early on as the economic data from China weighed on the outlook for demand. Rio Tinto, Fresnillo and BHP Billiton were all in the red.

Even precious metals producer Polymetal was lower despite signing 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. The move will allow Polymetal to start generating free cash flows at its newest mine by the third quarter.

AMEC, the engineering and project management firm, also underwhelmed after saying that it has been awarded an two-year extension to a contract with natural gas giant BG Group worth £110m.


FTSE 100 - Risers
ITV (ITV) 132.80p +2.63%
Royal Bank of Scotland Group (RBS) 332.10p +1.44%
Evraz (EVR) 129.20p +1.33%
Kingfisher (KGF) 350.50p +1.10%
International Consolidated Airlines Group SA (CDI) (IAG) 273.50p +1.03%
Whitbread (WTB) 2,894.00p +0.94%
easyJet (EZJ) 1,205.00p +0.92%
Wolseley (WOS) 3,120.00p +0.87%
William Hill (WMH) 440.00p +0.82%
InterContinental Hotels Group (IHG) 1,839.00p +0.71%

FTSE 100 - Fallers
Severn Trent (SVT) 1,993.00p -3.72%
Polymetal International (POLY) 653.00p -3.33%
Anglo American (AAL) 1,440.00p -1.57%
Antofagasta (ANTO) 908.50p -1.46%
Rio Tinto (RIO) 2,770.00p -1.35%
BHP Billiton (BLT) 1,810.00p -1.23%
Vedanta Resources (VED) 1,226.00p -1.21%
Randgold Resources Ltd. (RRS) 4,995.00p -1.09%
Fresnillo (FRES) 1,132.00p -1.05%
Shire Plc (SHP) 2,085.00p -1.04%

FTSE 250 - Risers
BBA Aviation (BBA) 282.00p +3.71%
Man Group (EMG) 98.20p +3.48%
Kenmare Resources (KMR) 31.78p +3.35%
Unite Group (UTG) 375.60p +3.24%
Betfair Group (BET) 833.50p +2.65%
Petra Diamonds Ltd.(DI) (PDL) 120.00p +2.48%
Afren (AFR) 128.80p +1.82%
Pace (PIC) 246.60p +1.48%
Carillion (CLLN) 250.00p +1.38%
CSR (CSR) 523.50p +1.36%

FTSE 250 - Fallers
African Barrick Gold (ABG) 134.00p -4.15%
Petropavlovsk (POG) 135.10p -3.57%
Amlin (AML) 390.60p -2.45%
Daejan Holdings (DJAN) 3,839.00p -2.24%
Investec (INVP) 442.80p -1.58%
Electrocomponents (ECM) 258.70p -1.56%
Carpetright (CPR) 605.50p -1.54%
Centamin (DI) (CEY) 38.00p -1.50%
PayPoint (PAY) 973.00p -1.47%
Lonmin (LMI) 292.80p -1.45%

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