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China dims market on slowdown

China sharesMon close: The government’s decision to start selling shares in RBS came after the market closed so the focus was on worse-than-expected manufacturing data in the US and China, which sent the FTSE lower at the close (down 7.66pts at 6,688.62)

New reports fuelled concerns about the slowdown in China and pushed mining stocks lower. Rio Tinto, Randgold Resources, BHP Billiton and Anglo American were among the fallers as commodity prices dropped.

The US was also left disappointed after ISM’s PMI on manufacturing fell to 52.7 in July from 53.5 a month earlier, compared with forecasts of 53.5.

A drop in oil prices also affected the market.

Better-than-forecast reports on UK manufacturing and US personal consumption expenditure failed to offset the negative data.

“Even though overall confidence remains weak and mostly driven by consumer goods, the July rebound reassures us,” according to Barclays Research analysts. “We are now looking for confidence in manufacturing to stabilise after deteriorating steadily since the cyclical highs reached in 2013.”

Meanwhile, Greece remained in focus as the Athens stock market opened at a record low following a fall in the economic sentiment index and manufacturing PMI.

HSBC headed the corporate news. Shares jumped after it said first half profits were up by 10%, beating analysis’ expectations. The bank said earnings were driven by a strong performance in Asia. Shares closed up 1.6p at 581.3p.

Rolls-Royce rose sharply, extending gains that began on Friday after it emerged that US hedge fund ValueAct has built a 5.4% stake in the aerospace and defence company. They closed up 47p at 841p.

RSA Insurance was also on the front foot following weekend press reports that the company’s board is looking for a 600p per share bid from Zurich Insurance and that the it will look to present a strong case for the group at first-half results on 6 August. Shares were up 9p at 523p.

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