MONDAY MARKET CLOSE: Weakening China keeps FTSE pegged

The prospect of another round of merger deals in the drinks industry failed to drag the FTSE 100 Index into positive territory.

Markets were on the back foot after China posted its weakest month of industrial production growth since the financial crisis. Picture: PA

London’s top flight joined other European markets on the back foot after China posted its weakest month of industrial production growth since the financial crisis. The Footsie was 2.75 points lower at 6,804.21.

Tony Cross, market analyst at Trustnet Direct, said: “One aspect that is undoubtedly weighing on broader sentiment is the growing tide of downbeat economic news we’re seeing out of China. Mining stocks – the usual whipping boys in this situation – have already been marked down as a result of falling iron ore prices of late, but now other firms with exposure to the world’s second largest economy are now starting to take some flak.”

SABMiller, which makes Pilsner Urquell and Grolsch, jumped almost 10 per cent- up 334.5p to 3,740p - after it reopened takeover speculation in the drinks sector by making an unsuccessful approach for Heineken.

The offer was rebuffed but SAB’s interest was taken as a sign that it is bolstering its own defences against a possible £75 billion bid from Stella Artois firm Anheuser-Busch InBev, which is reported to be talking to banks about financing.

Guinness and Smirnoff brewer Diageo was 40.5p higher at 1,853p amid wider consolidation hopes in the sector.

Elsewhere, shares in Dixons Carphone were 2 per cent higher after rival Phones 4u was forced into administration following network operator EE’s decision to join Vodafone in cutting ties with the chain, which has 550 shops.

Shares surged 7.7p to 379.9p as Investec said there was an opportunity for Dixons to capture market share as Phones 4u customers roll off contracts.