UK stocks ended the session moderately lower on Monday, pushed into decline by concerns over a stricter mortgage policy introduced in China, in an effort to curb soaring property prices, and political tensions in Italy.
The news out of Asia prompted declines amongst resources stocks on fears demand for building materials could be affected, while broader market sentiment succumbed to worries that Italy could face political gridlock until this next summer, as new elections are constitutionally not possible until then and the main political parties seem unwilling to form a coalition government (with the exception of Berlusconi's centre right movement).
Meanwhile, it was also revealed this morning that just £13.8bn was drawn down from the Bank of England (BoE) Funding-for-Lending Scheme (FLS) last year. The research also showed that net lending to UK households and business by FLS participants fell by £2.4bn during the three month period, compared to a rise of £0.9bn in the previous quarter.
In a statement the BoE said that funding costs have "fallen significantly" since the announcement of the scheme and there are indications of an improvement in credit conditions, with loan rates falling.
"But it will take time for this to feed through to lending volumes, given the typical lags involved in the loan application, approval and drawdown process," it admitted. The news helped push Lloyds and Barclays into the red.
Helping stocks to stabilise a little bit in late morning trading, the Vice-Chairman of the US Federal Reserve, Janet Yellen, argued in favour of maintaining the "highly accommodative monetary policy so as to support a stronger recovery and more-rapid growth in employment."
Acting as a backdrop, and highlighting the political risk which exists in the Eurozone, according to The Wall Street Journal Portugal is now seeking to renegotiate parts of its international bail-out agreement. In a similar vein, the FT wrote on Monday about how government calls for further budget austerity measures have been met with staunch opposition from labour unions.
FTSE 100: GKN leaps on upgrade
Support services firm Capita moved higher on the back of a price target revision from analysts at Berenberg, to 955p from 870p. Right behind were shares
of GKN after Goldman Sachs raised its target price from 195p to 272p and upgraded the stock from sell to neutral.
Emerging markets focused lender HSBC this morning reported a profit before tax of $20.6bn (£13.73bn), down 6% on 2011, including $5.2bn of adverse fair value movements on own debt. The consensus estimate had been calling for a profit before tax of £14.272bn. The group reported a record year in commercial banking, with reported profit before tax of $8.5bn, up 7%. Underlying revenues for the group were valued at $63.5bn (£42.3bn), up 7%. This was slightly below consensus expectations.
Miners were generally weaker this morning on the back of news out from China. Authorities surprised markets with larger than expected tightening measures in a bid to cool the housing market. Data on the country's services sector also came in below market expectations overnight.
Distribution and outsourcing group Bunzl acquired Brazilian outfit Labor Import Comercial Importadora Exportadora. As well, analysts at UBS hiked their target on the company to 250p from 200p before.
FTSE 250: Debenhams tumbles on profit warning
High Street retailer Debenhams admitted its UK business had been 'severely disrupted' by the snow in the latter part of January. The group said that whilst group like-for-like sales grew by around 3.0% for the 26 weeks to March 2nd, during the snow-affected period of January 14th-27th UK like-for-like sales were down by around 10%.
Defence, security and energy outfit Ultra Electronics announced full year underlying pre-tax profits of £115.6m, with revenues up 4.0% at £760m.
Specialist insurance and reinsurance underwriting group Amlin announced it has entered into an agreement to acquire RaetsMarine, a managing general agent ranked in the top three global providers of fixed premium P&I business.
FTSE 100 - Risers
Capita (CPI) 884.00p +2.97%
GKN (GKN) 275.90p +2.41%
Admiral Group (ADM) 1,276.00p +2.33%
Petrofac Ltd. (PFC) 1,466.00p +2.16%
Bunzl (BNZL) 1,310.00p +1.87%
Centrica (CNA) 361.40p +1.77%
British American Tobacco (BATS) 3,564.00p +1.60%
CRH (CRH) 1,461.00p +1.39%
Intertek Group (ITRK) 3,423.00p +1.27%
WPP (WPP) 1,071.00p +1.23%
FTSE 100 - Fallers
Kazakhmys (KAZ) 555.00p -5.93%
Lloyds Banking Group (LLOY) 51.30p -3.66%
Rio Tinto (RIO) 3,316.00p -3.66%
Evraz (EVR) 254.00p -2.87%
Anglo American (AAL) 1,849.00p -2.68%
Next (NXT) 4,141.00p -2.50%
HSBC Holdings (HSBA) 710.00p -2.49%
Xstrata (XTA) 1,099.50p -2.44%
TUI Travel (TT.) 310.30p -2.33%
Aviva (AV.) 348.30p -2.30%
FTSE 250 - Risers
Essar Energy (ESSR) 140.00p +2.64%
Hiscox Ltd. (HSX) 538.50p +2.57%
Dixons Retail (DXNS) 28.58p +2.55%
Millennium & Copthorne Hotels (MLC) 555.50p +2.40%
Playtech Ltd. (PTEC) 571.00p +2.33%
Daejan Holdings (DJAN) 3,500.00p +2.13%
St James's Place (STJ) 497.60p +1.70%
Great Portland Estates (GPOR) 501.00p +1.60%
Spirax-Sarco Engineering (SPX) 2,458.00p +1.57%
Cairn Energy (CNE) 275.70p +1.55%
FTSE 250 - Fallers
Debenhams (DEB) 80.70p -14.69%
Ferrexpo (FXPO) 203.90p -8.89%
Lonmin (LMI) 336.30p -5.48%
Tullett Prebon (TLPR) 259.80p -5.42%
Carillion (CLLN) 291.40p -5.39%
Centamin (DI) (CEY) 49.89p -5.33%
Redrow (RDW) 174.50p -4.54%
New World Resources A Shares (NWR) 240.00p -3.77%
Hochschild Mining (HOC) 360.00p -3.67%
Home Retail Group (HOME) 121.70p -3.64%
FTSE TechMARK - Risers
Ark Therapeutics Group (AKT) 0.95p +3.26%
Torotrak (TRK) 24.75p +3.12%
XP Power Ltd. (DI) (XPP) 1,158.00p +2.93%
Kofax (KFX) 288.00p +2.86%
Emblaze Ltd. (BLZ) 47.50p +2.70%
Gresham Computing (GHT) 83.50p +2.45%
Ricardo (RCDO) 401.50p +2.16%
Puricore (PURI) 49.50p +2.06%
Filtronic (FTC) 66.50p +1.53%
Promethean World (PRW) 17.50p +1.45%
FTSE TechMARK - Fallers
Skyepharma (SKP) 63.12p -4.36%
Vislink (VLK) 31.50p -4.18%
BATM Advanced Communications Ltd. (BVC) 18.25p -1.35%
Innovation Group (TIG) 24.75p -1.00%
Xaar (XAR) 325.00p -0.91%
Sepura (SEPU) 94.25p -0.79%
Triad Group (TRD) 6.00p 0.00%
Parity Group (PTY) 26.50p 0.00%
Antisoma (ASM) 1.88p 0.00%
Hiwave Technologies (HIW) 0.16p 0.00%