Market round-up: FTSE fails to maintain gains amid fresh concerns over China

UK stocks began the week on the back foot as the FTSE 100 reversed earlier gains to end a choppy session slightly in the red on 11 January.

The blue-chip index closed down 0.69% to 5,871.83 after edging in negative territory late in the day along with most of its European counterparts.

Asia extended last week's decline, amid renewed concerns over the health of the Chinese economy, as the Shanghai Composite Index tumbled 5.3% while Hong Kong's Hang Seng closed down 2.8%.

"The worst opening week performance this century was always going to be hard to replicate, and without the worries of market suspension, the Shenzhen index has only fallen by some 5%," said IG's market analyst Alastair McCaig.

"Although unimpressive, this performance has confounded those who had been making doomsday predictions of much worse to come."

Among FTSE 100 companies, BAE Systems extended last week's gains after analysts at JP Morgan Cazenove lifted their rating on the stock from "neutral" to "overweight", adding they believed 2016 could be a very important year for the defence sector company.

Sage was also on the front foot, after analysts at Bank of America Merrill Lynch upgraded the stock to "buy" from "underperform" and lifted the price target to 600p from 400p, indicating the group's chief executive, Stephen Kelly, was building a better business than the one he inherited.

At the other end of the scale, Sports Direct remained in the doldrums after issuing a profit warning on 8 January and following a report by The Times on 9 January which alleged that Mike Ashley, the group's founder, was being sued.

According to the newspaper, Ashley, who has a 55% stake in the business, allegedly offered an investment banker £15m ($22m) to get the company off the City's "blacklist" and to double its share price within the next three years.

Shire was also among the five worst performers on the FTSE 100 after the biopharmaceutical company's $32bn takeover offer for US-based sector peer Baxalta was accepted. The deal will see the former pay $45.57 per each share in the New York-listed company, a premium of 37.5% over the price of Baxalta stock on 3 August, the day before Shire first revealed its bid.

Having rallied upon the announcement, shares in Ireland-based Shire soon turned negative.

The FTSE 350 Mining sector touch its lowest level since 2004, dragging a number of mining stocks across London's two main indices deep in the red, with Glencore, Rio Tinto and Antofagasta among the worst performers on the FTSE 100.

Meanwhile, Laird led the FTSE 250 risers after The Sunday Telegraph reported that US electronics group Amphenol was considering a bid in the region of £1.2bn for the company.

Real estate firm Savills was among the top risers on London's second tier market after it revealed underlying full-year results will be better than expected, thanks to its investment management business.

Home Retail mustered a late rally after City sources suggested Sainsbury's might have to raise its bid for the owner of Argos by as much as £500m, while Ocado extended last week's losses. The online grocer has been under pressure since Amazon introduced its Pantry service in Britain in November.

The service allows customers of the US retail giant to choose from a range of around 4,000 grocery and household products excluding fresh food.

FTSE 100 – Risers

Whitbread 4,199.00p +1.92%
Sage Group 588.00p +1.82%
Carnival Group 3837.00p +1.70%
BAE Systems 526.50p +1.35%
Intertek Group 2,689.00p 1.17%

FTSE 100 – Fallers

Shire Plc 3,925.00p -8.23%
Sports Direct International 403.00p -6.99%
Glencore 73.43p -5.23%
Antofagasta 387.70p -2.66%
BHP Billiton 636.10p -2.45%

FTSE 250 – Risers

Laird 360.90p +9.70%
Home Retail Group 144.70p +4.93%
Jimmy Choo 122.70p +4.78%
Moneysupermarket.com Group 377.10p +3.46%
Savills 873.00p +3.31%

FTSE 250 – Fallers

Vedanta Resources 207.60p -8.34%
Cable & Wireless Communications 69.45p -6.28%
Ocado Group 276.80p -6.17%
Big Yellow Group 766.50p -4.90%
Hays 129.90p 2,770.00p -4.84%