London open: Stocks fall as Chinese and Eurozone PMIs miss forecasts

LONDON (ShareCast) - UK stocks inched lower on Thursday morning after purchasing managers' index (PMI) data from both China and Europe disappointed. The FTSE 100 was down 0.13% at 7,018.93 within the opening hour, with ex-dividend stocks keeping the index in the red.

Overnight, a HSBC survey showed that Chinese manufacturing contracted at a faster rate than expected in April. The PMI for manufacturing fell from 49.6 to a one-year low of 49.2, surprising analysts who had expected no change.

Economist Chris Williamson from Markit (NasdaqGS: MRKT - news) said the soft data added to the chance of further policy stimulus from Beijing.

"The drop in the PMI in April clearly represents a disappointing start to the second quarter, raising the possibility of economic growth having lost further momentum compared to the already-weak rate seen in the opening quarter of the year," he said.

Closer to home, growth in both Eurozone manufacturing and services slowed down in April, causing the region's composite PMI to fall to 53.5 from 54. The market had expected an increase to 54.4.

In France, Markit's composite PMI declined to 50.2, down from 51.5 in March and below the 51.8 forecast, as service-sector growth eased while manufacturing contracted further.

The German composite PMI also fell to 54.2 from 55.4 (forecast: 55.6) as growth in both the manufacturing and services sectors eased.

Pace (Other OTC: PCMXF - news) rockets on Arris deal Pace , the UK cable television set-top box maker, jumped 33% after agreeing to be taken over by US telecommunications equipment manufacturer Arris in a $2.1bn deal. Pace management have agreed that Arris will pay Pace shareholders 426.5p in cash and stock, a 28% premium to the closing price on Wednesday.

A number of heavyweight stocks were providing a drag on the Footsie after going ex-dividend, including Aggreko (LSE: AGK.L - news) , Antofagasta (Other OTC: ANFGF - news) , ARM Holdings (LSE: ARM.L - news) , Barratt Development, BG Group (LSE: BG.L - news) , Glencore (Xetra: A1JAGV - news) , Legal & General (LSE: LGEN.L - news) , Mondi (LSE: MNDI.L - news) , Old Mutual (Other OTC: ODMTY - news) and Unilever .

Aeroplane and components maker Meggitt (Other OTC: MEGGF - news) gained after trading in the first quarter continued along its expected flight path of low to mid single-digit revenue growth for the full year.

Diversified mining giant Anglo American (LSE: AAL.L - news) fell after two of its three largest divisions experiencing declines in output in the first quarter. Miners on the whole were trading lower after the Chinese data, with sector peers BHP Billiton (NYSE: BBL - news) and Vedanta registering losses.

First (Other OTC: FSTC - news) -quarter profits shrank a t William Hill (Other OTC: WIMHF - news) in part due to the bookmaker's worst ever loss-making week from football betting and the new UK point-of-consumption tax. Shares (Berlin: DI6.BE - news) fell sharply after the open.

Meanwhile, UK housebuilder Taylor Wimpey (LSE: TW.L - news) underwhelmed with a bullish statement to the market, saying that a strong economy has prompted an upbeat start to the spring selling season. The group said customer confidence has not been affected by pre-election uncertainty, but that didn't stop the stock from falling.

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