By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- Stocks in London stayed mostly lower on
Monday, after U.K. manufacturing data missed expectations and fell
to a three-month low.
The FTSE 100 index dropped 0.2% to 6,495.29, setting it on track
for the lowest closing level since Dec. 17.
The benchmark stayed lower after the CIPS/Markit purchasing
managers' index for the U.K. manufacturing sector fell to 56.7 in
January from 57.2 in December, falling short of analysts'
expectations. A reading above 50 signals expansion, with the data
suggesting continued improvement in the U.K. economy.
"With jobs growth strong, we do not expect any slowdown in
domestic-demand growth in 2014. Indeed, the risks are that it
accelerates further, with investment likely to pick up and consumer
confidence improving. We also do not expect serious fallout for the
U.K. from the emerging-market wobbles," said Rob Wood, chief U.K.
economist at Berenberg, in a note.
PMI data from China were also in the spotlight, after official
readings released at the weekend showed a slowdown in growth in
both the services and manufacturing sectors.
Among notable movers in London, shares of Lloyds Banking Group
PLC (LYG) dropped 2.3% after the bank said it would set aside an
extra 1.8 billion pounds ($3 billion) to repay customers who were
mis-sold payment-protection insurance (PPI). Despite the extra
provision, the bank said underlying earnings for the full-year
would come in ahead of expectations and that it would reinstate
dividends.
"Lloyds says it is still on track to post a small profit, but
the PPI costs will certainly hit earnings for the bank at a time
when the government and the bank are looking to get the taxpayers'
stake sold-off back into the markets," Ishaq Siddiqi, market
strategist at ETX Capital.
"Lloyds is seen as the better-behaved U.K. bank versus
scandalous peers RBS and Barclays. However, like them, it cannot
run away from the banking sector's errors of the past," he
added.
Royal Bank of Scotland Group PLC (RBS), down 0.3%, warned last
week of a GBP3 billon surprise provision, including GBP465 million
to pay for PPI claims.
On a more upbeat note, Smith & Nephew PLC climbed 1.5% after
the medical technology group said it will buy medical-device maker
Arthrocare Corp.(ARTC) for $1.7 billion in cash.
Randgold Resources Ltd. gained 1.9% after the gold miner said it
boosted gold production to a record level in 2013.
In Ireland, shares of Ryanair Holdings PLC gained 5.4% after the
budget airliner confirmed its full-year guidance, even as it swung
to a loss in its fiscal third quarter.
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