The FTSE 100 index and the FTSE 250 index were essentially unchanged by the close of the trading day on Monday. Both of the indices were unable to sustain a small rally that was set in motion earlier in the day based on better-than-expected data out of China and news that, after plenty of waiting, Spain formally requested bailout money for its banks.
The markets had been expecting Spain to formally seek a bailout for some time, though the Spanish government resisted the move for months.
"Today, Spain formally requested the release of €39.5 billion of European funds to recapitalise its banks at around 12th December," explained Joshua Raymond, chief market strategist at City Index. "The formal request is nothing of a surprise of course given the fact the country had already informally request bailout funds for its banks. Spain will auction up to €4.5 billion worth of bonds on Wednesday so it will be interesting to see whether after the formal request the country can enjoy a similarly successful auction to last month’s auction, which was well subscribed. My hunch is the formal request provides further clarity and this could be well received by investors."
Meanwhile, the Chinese data which helped give UK markets a morning lift came from the manufacturing sector.
"The HSBC/Markit manufacturing PMI for China rose to a thirteen-month high of 50.5 in November, and the alternative “official” PMI also rose. Looser monetary policy in China – although not on the same scale as that in 2009 – is clearly having the desired effect in stabilising the economy. That said, the Chinese recovery is itself uneven, with smaller firms not benefitting much," stated Andrew Kenningham, a senior global economist at Capital Economics.
On the equity front, the biggest decliner on the FTSE 100 was Hargreaves Lansdown (HL.). Shares in the financial services firm fell back by nearly 3% on Monday.