LONDON (Alliance News) - The FTSE 100 overturned early strength to close lower Monday, as investors digested some weaker-than-expected Chinese trade data released over the weekend, amid a lack of fresh major macro-economic data releases.
A report from the Chinese General Administration of Customs on Saturday showed that China swung to a trade deficit in February.
While Chinese imports grew by 10% in February, exports declined unexpectedly, dropping by 18%. This meant that China's trade balance showed a deficit of USD22.98 billion compared to the surplus of USD31.86 billion seen in January, and came in well short of the USD14.50 billion surplus that had been expected.
Moreover, the combined data for January and February, used to smooth out the volatility caused by the Lunar New Year holiday, showed that exports fell 1.6% but imports rose 10% resulting in a drop in the trade surplus to USD8.89 billion.
UK stocks shrugged off the data and a lower close in Asia to trade in the black for the majority of early trading, before turning negative following a weak open on Wall Street.
Eventually, the FTSE 100 closed down 0.4% at 6,689.45, and the FTSE 250 closed down 0.7% at 16,451.2. The AIM All-Share index outperformed its larger peers, however, closing fractionally higher at 896.81.
In Europe, the DAX 30 in Frankfurt closed down 0.9%, with the CAC 40 in Paris closing slightly higher. Earlier in the day, Asian stocks closed significantly lower, with the Nikkei in Tokyo closing down 1%, the Hang Seng closing down 1.8% and the Shanghai Composite index closing down 2.9%.
On Wall Street, at the close of the UK equity markets, the DJIA, S&P 500, and NASDAQ Composite are all down between 0.3% and 0.4%.
The FTSE 350 mining sector was one of the heaviest falling sectors Monday, closing down 1.8%. Mining companies were unsurprisingly hit after the weaker-than-expected Chinese trade data reignited fears that the world's second largest economy is slowing. Fresnillo, Rio Tinto, Antofagasta, Anglo American, and Glencore Xstrata all closed amongst the heaviest fallers in the FTSE 100, down 3.4%, 2.4%, 2.1%, 2%, and 1.9%, respectively.
FTSE 250-listed Polymetal International, down 2.6%, and Kazakhmys, down 2.1%, also were big losers.
Crude oil was also pushed lower following the release of the data. "Although China?s crude imports in the first two months of the year rose some 11.5% compared to the same period in 2013, this was completely overshadowed by exports data," said Fawad Razaqzada, technical analyst at Forex.com. At the close of the UK equity markets Brent oil trades at USD107.98 per barrel.
Rolls-Royce Holdings ended the day as the biggest riser in the FTSE 100, closing up 2.3%. The firm's shares jumped after it said after the UK equity market close on Friday that it will acquire German carmaker Daimler's 50% stake in joint venture Rolls-Royce Power Holdings.
GlaxoSmithKline, closing up 1.2%, was also amongst the stand-out blue-chip winners. The drugs giant has now launched the GBP629 million open offer to increase its stake in its Indian unit to 75%, from 50.7%, a deal it had announced back in September. It said it will offer INR3,100 a share for up to 20.6 million shares in GlaxoSmithKline Pharmaceuticals Ltd, or a maximum 24.3% stake.
It said the offer is a premium of about 26% to the Indian unit's share price on December 13, 2013.
Pennon Group, ending the day up 2.2%, was amongst the leading gainers in the FTSE 250. Shares in the company jumped after UK regulator Ofwat said South West Water, which is owned by Pennon, had qualified for a fast-track passage through its 2014 price review for the next regulatory period.
Earlier this year Ofwat said it will "pre-qualify" water companies that have outstanding business plans for the period 2015 to 2020, meaning plans that pass its tests for outcomes, cost and affordability, and board assurance.
AIM All-Share-constituent Fyffes ended the day up 44%. Fyffes' share price soared after said it would be acquired by New York-listed Chiquita Brands International in a deal that will create the world's biggest banana company.
The two companies announced that they have an agreed all-stock deal which will result in Chiquita shareholders owning 50.7% and Fyffes holders owning 49.3% of ChiquitaFyffes. They said they expect the deal to result in annual overheads and operational cost synergies of at least USD40 million by the end of 2016. The synergies will mainly come from combining logistics and procurement operations.
In the forex market, the euro continued its recent strength Monday. At the close of the UK equity market, the single currency trades at USD1.3877 and JPY143.230, while the pound trades at multi-day lows of EUR1.1985.
Sterling also trades at multi-day low against the dollar, at USD1.6639, and its lowest level against the Swiss franc since late-December, at CHF1.4609.
In a busier data calendar Tuesday, German trade data is released at 0700 GMT, ahead of the Italian fourth quarter GDP reading at 0900 GMT. UK industrial and manufacturing figures are scheduled to be released at 0930 GMT, with UK inflation report hearings released at 1000 GMT.
In the afternoon, the US Redbook index is set to be released at 1255 GMT, ahead of US wholesale inventories data for January at 1400 GMT. The National Institute of Economic and Social Research releases its UK GDP estimate for February.
In the corporate calendar, blue-chip Antofagasta is joined by FTSE 250-listed Computacenter, Inchcape, Hansteen Holdings, Close Brothers Group, Foxtons Group, esure Group and Fenner, amongst others, in releasing full-year results for 2013.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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