Sentiment was dampened by yet more disappointing economic data from China overnight, where activity in the manufacturing sector weakened. The HSBC/Markit ‘flash’ manufacturing purchasing managers’ index for February fell further into contraction, slipping to 48.3 from 49.5.

Japan, meanwhile, was making headlines after recording its biggest trade deficit in history in January of 2.79tn yen.

Investors were also focusing on the minutes from the latest Federal Reserve policy meeting released last night which showed that some policymakers had suggested raising interest rates by the second half of this year, sooner than analysts currently expect.

The FTSE 100 was trading 0.7% lower at 6,750 in early trading.

BAE, Rexam, mining stocks fall

Military hardware manufacturer BAE Systems slumped after reporting a 3% increase in operating profits to £1.9bn for 2013, but warned that profits could fall by up to 10% on the back of pressures on US government spending.

Packaging group Rexam also slumped after missing analysts’ estimates slightly with its 2013 results. The company underwhelmed after saying it expects to make “further progress” in 2014, but only on a constant currency basis.

Mining stocks were also providing a drag in London after the data from top metals consumer China disappointed. Fresnillo, Anglo American, Randgold and Rio Tinto were all trading in the red.

Supermarket group WM Morrison was pulling back after strong gains yesterday as speculation surrounding a possible private-equity buyout continued to do the rounds.

RBS was lower after Investec downgraded the stock to ‘sell’, recommending investors to reinstate short positions ahead of the bank’s results next week.

Leading the upside was Petrofac after the oilfield services firm won a £1.2bn contract from BP to build a gas processing facility in Oman.

William Hill was higher after both Goldman Sachs and Exane BNP Paribas upgraded their ratings on the stock to ‘buy’ and ‘outperform’, respectively.

FTSE 100 – Risers

Petrofac Ltd. (PFC) 1,366.00p +2.71%
William Hill (WMH) 350.70p +1.42%
Vodafone Group (VOD) 225.90p +1.14%
Severn Trent (SVT) 1,807.00p +0.67%
BP (BP.) 496.85p +0.37%
SSE (SSE) 1,402.00p +0.21%
Associated British Foods (ABF) 2,920.00p +0.17%
Sainsbury (J) (SBRY) 348.60p +0.14%
InterContinental Hotels Group (IHG) 1,967.00p +0.05%

FTSE 100 – Fallers

BAE Systems (BA.) 396.10p -9.32%
Rexam (REX) 486.00p -7.34%
Fresnillo (FRES) 962.50p -2.97%
Anglo American (AAL) 1,545.00p -2.77%
Aberdeen Asset Management (ADN) 385.30p -2.46%
Randgold Resources Ltd. (RRS) 4,720.00p -2.44%
Morrison (Wm) Supermarkets (MRW) 239.10p -2.01%
Mondi (MNDI) 1,031.00p -2.00%
Rio Tinto (RIO) 3,556.00p -1.97%
GKN (GKN) 405.80p -1.91%

Source: ShareCast