Market Report: IMI and GKN fall foul of European pessimism

All the focus may have been on Brussels yesterday and the kick-off of the do-or-die eurozone summit, but investors were being warned off the region. Claims Europe is heading towards a "difficult recession" left IMI and GKN deep in the red after being picked out as especially exposed to the continent by Credit Suisse.

The engineers were among a number of stocks highlighted by the Swiss broker as facing a tough time ahead thanks to Europe providing a high proportion of their business. As a result, IMI finished 34.5p behind at 737p after having its rating cut to "underperform", while GKN – which was downgraded to "neutral" – slid back 6.5p to 183.4p.

Credit Suisse's scribblers said that although they expected "decisive action" from the meeting between European leaders, there would be no "quick fix", adding that "the combination of austerity measures and weak demand will lead to a difficult growth environment within Europe over the next few years".

They were rather more positive over the rest of the world, however, saying they no longer expected a global recession. The analysts also claimed the US was "one area of positive momentum... among developed countries", which was supported by figures from across the Atlantic showing new unemployment claims falling to their lowest for nine months.

Yet despite Weir having its "outperform" rating reiterated on its exposure to the States, as well as emerging markets, the pump-maker finished 49p weaker at 1,993p while Fenner slipped back 8.2p to 382.9p even as the conveyor belt manufacturer had its target price raised from 415p to 470p.

The defensives were in charge as the FTSE 100 moved 63.14 points lower to 5,483.77, with Lucky Strike-maker British American Tobacco taking the top spot after rising 45.5p to 3,015p. Any comments emerging from Belgium were being closely analysed across trading desks, including German Chancellor Angela Merkel's attempts to play down expectations by claiming there was no "big-bang" solution to the eurozone's issues.

At the same time, although there were few surprises from either the Bank of England or European Central Bank's rate decisions, Mario Draghi – president of the latter – disappointed dealers by dampening hopes of an increase in its bond-buying programme.

It had been a positive start to the session from the heavyweight miners, but their early gains were wiped out by the bell. Kazakhmys and Antofagasta retreated 21.5p to 919.5p and 38p to 1,192p despite a bullish note on copper from Nomura, which raised their ratings to "neutral" and "buy" respectively while claiming expectations for the price of the metal were too low.

Although traders welcomed reports claiming the Lloyds' boss Antonio Horta-Osorio is itching to return from sick leave, the bank was still left in last place after being pegged back 2.01p to 25.08p. Espirito Santo's Shailesh Raikundlia was responsible for some of the damage as he removed his "buy" recommendation, saying he did not expect the group to meet its cost of capital either next year or 2013.

There were further signs of the benefits of exposure to the United States from Ashtead, with the van hire group jumping up 25.7p – or 13.82 per cent – to 211.7p after announcing for the second time in three months that it was on course to beat expectations.

Meanwhile, at the other end of the FTSE 250 a profit warning, blamed on rising ingredient costs, resulted in PZ Cussons taking the wooden spoon as the Imperial Leather-maker was driven back 36p to 308.7p.

London & Stamford was stuck at its lowest for more than two-and-a-half years after the property investor's largest shareholder, GE Asset Management, decided to get rid of all of its shares, which prompted the group to drop 8.7p to 106.5p.

It was left to the last possible moment, but – after months of talks – Kalahari Minerals and China Guangdong Nuclear Power finally struck a deal on the day of the put-up-or-shut-up deadline. The news the AIM-listed uranium producer had agreed to a £632m, or 243.55p a share, takeover lifted it 7.5p to 242p.

Bango was being rather coy, as the mobile payments group announced it had signed an agreement with retail giant Amazon but refused to announce any specifics on either the numbers or services involved.

Yet, considering it revealed last month that it expected to reach a deal with a "major app store" before the end of the year, investors were quick to put two and two together and the group shot up 21.24 per cent to 68.5p.

Elsewhere, retail punters' favourite Bowleven edged up 1.25p to 71.25p as vague takeover talk around the West African oil explorer refused to go away.