London midday: Stocks flat as worries about China, rates weigh on sentiment

(Sharecast News) - London stocks had pared earlier losses to trade flat by midday on Tuesday, as worries about the Chinese economy and elevated interest rates, and a US credit warning from Moody's weighed on sentiment. The FTSE 100 was steady at 7,626.88.

Moody's warned overnight that a US government shutdown could threaten the country's triple-A credit rating. The agency said that while a shutdown wouldn't affect debt service payments, "it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years".

China's economic woes were also in focus after Evergrande shares plunged for the second day in a row, as the real estate groups' mainland unit missed a debt payment.

The prospect of lingering high interest rates was also causing jitters among investors.

Susannah Streeter head of money and markets at Hargreaves Lansdown, said: "With little data expected to blow away worries about the impact on high interest rates, concerns are set to linger, holding back gains for stocks.

"Nervousness is setting in about restrictive monetary policy in major economies, particularly the US, reducing appetite for goods and services, as consumers and companies keep their belts tightened."

In equity markets, luxury fashion brand Burberry was under the cosh after Morgan Stanley and Deutsche Bank both cut their price targets on the shares.

Close Brothers slid after the merchant bank said profit halved in the second half of the year due to provisions related to Novitas.

Smiths Group edged lower even as the engineer reported a 20% rise in annual operating profit, driven by volume growth and higher prices, which offset the impact of inflation.

PZ Cussons was a touch weaker as the Imperial Leather maker held annual guidance despite a fall in full-year profits as cost inflation and issues at its Nigerian operation continued to weigh.

Premier Inn owner Whitbread was knocked lower by a downgrade to 'sell' from 'neutral' at Redburn.

On the upside, Barclays rallied after an upgrade to 'overweight' by Morgan Stanley, while British Land, Bytes Technology and Redde Northgate also gained after updates.

Outside the FTSE 350, fast fashion giant Asos was a little weaker as it revealed that operating profits for the full year will come in at the bottom end of expectations and free cash flow will be significantly lower than guidance.

Market Movers

FTSE 100 (UKX) 7,626.88 0.04% FTSE 250 (MCX) 18,354.59 -0.33% techMARK (TASX) 4,341.35 -0.07%

FTSE 100 - Risers

Barclays (BARC) 158.56p 3.20% Ocado Group (OCDO) 673.40p 2.50% Imperial Brands (IMB) 1,670.00p 1.86% St James's Place (STJ) 832.40p 1.46% International Consolidated Airlines Group SA (CDI) (IAG) 149.05p 1.22% Aviva (AV.) 398.60p 1.14% British American Tobacco (BATS) 2,651.50p 1.13% CRH (CDI) (CRH) 4,614.00p 1.12% 3i Group (III) 2,054.00p 1.08% M&G (MNG) 206.40p 1.03%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 261.30p -3.01% Berkeley Group Holdings (The) (BKG) 4,127.00p -1.97% Whitbread (WTB) 3,506.00p -1.96% Halma (HLMA) 1,909.50p -1.83% RS Group (RS1) 700.20p -1.38% Fresnillo (FRES) 564.20p -1.36% Hikma Pharmaceuticals (HIK) 2,070.00p -1.33% WPP (WPP) 724.60p -1.28% Diploma (DPLM) 2,976.00p -1.26% Spirax-Sarco Engineering (SPX) 9,356.00p -1.25%

FTSE 250 - Risers

IG Group Holdings (IGG) 659.00p 3.21% North Atlantic Smaller Companies Inv Trust (NAS) 3,630.00p 2.54% Wizz Air Holdings (WIZZ) 1,901.50p 2.48% FDM Group (Holdings) (FDM) 514.00p 1.98% British Land Company (BLND) 322.20p 1.93% Bytes Technology Group (BYIT) 506.50p 1.67% Bellway (BWY) 2,330.00p 1.66% Redde Northgate (REDD) 340.00p 1.64% Oxford Instruments (OXIG) 2,210.00p 1.61% Intermediate Capital Group (ICP) 1,339.00p 1.44%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 431.60p -4.60% Ferrexpo (FXPO) 75.50p -3.88% Coats Group (COA) 76.10p -3.79% Vesuvius (VSVS) 423.40p -3.51% Drax Group (DRX) 434.20p -3.19% Bakkavor Group (BAKK) 92.20p -2.95% IWG (IWG) 146.20p -2.79% Kainos Group (KNOS) 1,185.00p -2.55% Ithaca Energy (ITH) 161.00p -2.42% Johnson Matthey (JMAT) 1,608.50p -2.31%