LONDON (ShareCast) - Markets are expected to be under pressure on Monday morning after economic figures from China showed that the manufacturing sector contracted at a faster-than-expected rate in may.

The final reading of the Chinese manufacturing purchasing managers' index (PMI) was revised lower to 49.2, worse than the initial 49.6 estimate. With any figure below 50 representing contraction, this now stands at its worst level in eight months. April's reading was 50.4.

HSBC's Chief Economic for China, Qu Hongbin, said that the final PMI "suggests a marginal weakening of manufacturing activities towards the end of May, thanks to deteriorating domestic demand conditions".

Nevertheless, the government's official figures released this weekend showed the PMI rising from 50.6 to 50.8 in May.

City sources predict the FTSE 100 will open down 45 points from Friday's close of 6,583.

Manufacturing PMI figures are due out in both the UK and US later on today.
 

Stocks to watch

Manufacturing investment firm Melrose is eyeing a potential disposal of its lifting equipment divisions, Crosby and Acco, the company announced on Monday morning. Confirming media speculation over the weekend, Melrose said that it is in the very early stages of considering a possible sale of the units as part of its "established business model to buy good manufacturing businesses, improve their performance and realise value, often within a three- to five-year time frame."

FTSE 100-listed Associated British Foods has reported that its wholly-owned subsidiary British Sugar will repay at par and in full the principal amount of £150m of the 10.75% redeemable debenture stock 2013.

Metal flow engineering group Vesuvius has completed the sale of its Precious Metals Processing Division to a division of German industrial production giant L Possehl & Co mbH. The disposal, first announced in March, is worth €56.8m and will be followed by a share buyback programme to return £30m backk to shareholders. This will commence after the annual general meeting on Tuesday and take up to six months to complete.

BC

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