Britain's top share index edged down in thin trade on Monday, with fresh evidence the global economy is slowing fuelling modest profit taking as prospects for central bank monetary stimulus remained hazy.
Cyclical stocks fell after data showed Japan's economy expanded at half the pace expected between April and June as a rebound in consumer spending lost momentum and Europe's debt crisis weighed on worldwide demand.
Mining stocks were the biggest drag on the market as China's July copper output report pointed to a 6.8 percent drop from a month earlier, with large stockpiles and weak demand prompting smelters to cut production.
Investor hopes that the ECB would intervene in the sovereign bond market to tackle the crisis and provide new stimulus to the economy were tempered over the weekend, when Belgian board member Luc Coene raised concerns that new bond purchases could
take the pressure off governments to repair their finances.
“Markets have run up sharply on hopes that central banks will fire stimulus measures soon, but how soon is now the question on investors' lips. We haven't seen any action and (there is) ongoing discord between policymakers in Europe,” Ishaq Siddiqi, a market strategist at ETX Capital said.
“So expect profit taking and high volatility for next few weeks, until central bankers deliver.”
Britain's FTSE 100 index was down 4 points, or 0.1 percent, at 5,843.97 at 13:04 SA time, edging further away from four-month highs hit on Thursday.
Volume was extremely low at 13 percent of the 90-day average, driving volatility, albeit in a narrow range between 5,823.28 and 5,852.79 points.
Oil services firm Petrofac led fallers, shedding 5.6 percent, having traded more than 80 percent of its full-day average on concerns over contract delays as it reported first-half results.
“The company ... has highlighted that year-on-year growth in H2 is expected to be lower, and contract awards are still being delayed,” Oriel Securities said in a note.
Standard Chartered, up 1.5 percent, led a rally among banking stocks as some investors take new positions in the lender after its shares shed 13 percent last week on a probe over whether it improperly hid transactions tied to Iran.
“You can see that market sentiment is quite prepared to punish and they are overextending on the downside,” Oliver Wallin, investment director at Octopus Investments.
StanChart is hoping to reach a settlement within days over the charges and is set to resume talks with US regulators on Monday, sources familiar with the situation said. - Reuters