Britain's FTSE flat as euro zone fears offset China boost
* FTSE 100 index flat
* Euro growth worries resurface after PMI data
* Chinese manufacturing data had provided lift
* Bunzl, ENRC and Anglo all respond to broker notes
By Alistair Smout
LONDON, Dec 14 (Reuters) - UK shares were broadly flat in early deals on Friday, after euro zone purchasing managers surveys suggested recession was deepening, turning back a positive start due to improved figures out of China.
Stocks were also hit by Spanish Prime Minister Mariano Rajoy's reiteration that Spain would not be requesting a bailout right now.
Such a request is a precursor to direct monetary support from the European Central Bank for a country still seen as at the heart of the euro zone's problems.
China's HSBC flash purchasing managers' index for December, by contrast, hit a 14-month high thanks to a fifth straight monthly gain.
"The Chinese PMI was slightly better, and it was enough to give markets a jump today. People are realising that the Chinese recovery is taking hold," Nick Xanders, head of European equity strategy at brokerage BTIG, said.
A China recovery into 2013 could help a UK-listed mining sector that has weighed on the FTSE this year, leading it to underperform European peers.
"I'm not convinced that the European situation is done and dusted yet, however, and I think there's potential for earnings downgrades in the first half of next year," he added.
At 0955 GMT, the FTSE 100 index was down just 0.35 points - or 0.01 percent - at 5,929.37, having closed 16.24 points lower on Thursday at 5929.61, a move which brought an end to six days of continuous gains.
Among the biggest gainers on the FTSE 100 was outsourcing firm Bunzl, which added 1.1 percent after U.S. bank Citi raised its rating to Buy from Hold.
"Three month relative underperformance has returned Bunzl's valuation to an attractive level," the bank's analysts said in a note.
"We like the potential for further growth regardless of macro-economic conditions and, historically, Bunzl has outperformed the FTSE 100 during bear markets without sacrificing relative performance during recovery bull markets."
The two heaviest fallers on the index also reacted to broker notes, with miners Eurasian and Anglo American shedding 2.7 and 1.5 percent respectively. Traders cited a UBS downgrade of the pair to "neutral" from "buy".
The broader lack of direction in the index was reflected in volumes, which were a mere 8.8 percent of the already thin average 90 day volume at 0917 GMT. (Additional reporting by David Brett; editing by Patrick Graham)
- Tweet this
- Share this
- Digg this