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(Alliance News) - Stocks in London struggled for direction on Monday with US markets closed for Martin Luther King Jr Day, with economic data from China doing little to impress investors.
China's economy grew at the slowest pace in more than four decades last year despite a rebound after the country's coronavirus outbreak, though growth topped market forecasts.
The 2.3% expansion is the lowest figure since the Chinese economy embarked on major reforms in the 1970s. The National Bureau of Statistics said last year was a "grave and complex environment both at home and abroad" with the pandemic having a "huge impact".
The figure was a marked slowdown from 2019 growth of 6.1% - itself already the lowest in decades – with the country hit by weak domestic demand and trade tensions. But it is better than that forecast by an AFP poll of analysts from 13 financial institutions, who predicted a 2.0% expansion.
Elsewhere, China industrial production grew 2.8% on-year for 2020, slowing further from previous years. Retail sales, whose recovery has lagged behind that of industrial activity, shrank 3.9% for the full year with consumers wary of spending as the coronavirus pandemic lingered.
The FTSE 100 index closed down 15.06 points, or 0.2%, at 6,720.65. The FTSE 250 ended up 23.75 points, or 0.1%, at 20,639.34, and the AIM All-Share closed flat at 1,173.26.
The Cboe UK 100 ended down 0.1% at 669.38, the Cboe UK 250 closed up 0.4% at 17,951.84, and the Cboe Small Companies ended up 0.1% at 12,304.59.
In Paris the CAC 40 ended up 0.1%, while the DAX 30 in Frankfurt ended up 0.4%.
"European markets have continued on in their quiet way today, marking time without the US and feeling oddly bereft after bank earnings on Friday heralded the start of reporting season. Overall stock markets have failed to take much heart from the Chinese GDP data overnight, and instead a cautious atmosphere has prevailed in London and on other bourses," said IG Group's Chris Beauchamp.
"Given how far stocks have come since the end of October some hesitancy about the next steps is understandable - much of the good news that may be imparted by earnings season has already been factored in, and perhaps the best we can hope for is a collective shrug of indifference, avoiding any major selloff in the near-term," added Beauchamp.
In the FTSE 100, Next closed up 1.0%, with the clothing and homewares retailer tipped as a frontrunner to take control of Arcadia, as the deadline approaches to acquire the troubled Topshop owner.
It is understood that final bids for the business are due on Monday, although there could be some flexibility. Administrators at Deloitte are expected to receive bids worth more than GBP200 million in the process, which could be completed by the end of the month, according to the Sunday Times.
Next has been touted as one of the most likely victors in the process, with the listed retailer bidding for the group in partnership with US hedge fund Davidson Kempner.
At the other end of the large caps, BT Group ended among the worst performers, down 1.5%. The former state monopoly is facing a class action lawsuit over claims it failed to compensate elderly customers who were overcharged for landlines.
Mishcon de Reya has filed claims at the Competition Appeal Tribunal it says could result in payments of up to GBP500 each for 2.3 million BT customers. BT said it "strongly disagreed" with the action, adding it had offered discounted landline and broadband packages for years.
The claim is being made on behalf of Justin Le Patourel, the claimant representative and founder of Call, which means Collective Action on Land Lines.
He said: "Ofcom made it very clear that BT had spent years overcharging landline customers but did not order it to repay the money it made from this."
"We think millions of BT's most loyal landline customers could be entitled to compensation of up to GBP500 each, and the filing of this claim starts that process".
In response, BT said: "We strongly disagree with the claim being brought against us. We take our responsibilities to older and more vulnerable customers very seriously and will defend ourselves against any claim that suggests otherwise."
British Airways parent International Consolidated Airlines closed down 0.8% as new coronavirus travel rules came into force, with travel corridors shut.
The move is part of the UK government's attempts to prevent new strains of Covid-19 entering the UK.
Peers easyJet and Ryanair Holdings closed down 1.9% and 3.1% respectively.
CMC Markets analyst David Madden said: "The current environment is not exactly upbeat as things are getting worse with respect to the lockdowns. The British government has closed the air corridors, so passengers arriving from outside the UK will need to show proof of a negative Covid-19 test as well as self-isolating once they arrive in the country.
"Last week, Portugal implemented harsher restrictions, France introduced a curfew from 6pm and it was reported the Berlin administration is also contemplating a curfew. China's localised lockdowns are increasing too. Tighter restrictions should lead to even worse economic pain that is being inflicted by the lockdowns."
The pound was quoted at USD1.3570 at the London equities close, lower from USD1.3597 at the close Friday, amid fears of the damage lockdowns will have on the domestic economy, as Covid-19 cases rise.
On Friday, data from the Office for National Statistics showed the UK economy shrank in November, as new restrictions were imposed on much of the country to slow the spread of Covid-19.
On a monthly basis, the UK gross domestic product shrank 2.6% in November after posting 0.6% growth in October, as restrictions were in place to varying degrees across all four nations of the UK during November.
"The pound has eased back with the GBP/USD trading near the key 1.35 handle amid worries about the economic impact of the latest lockdowns. However, the dollar's comeback is not a game changer and it is far too early to suggest it has formed a major low. Martin Luther King Day means US banks are closed and it will likely be a quiet afternoon with the lack of US data, but things will pick up later in the week with plenty of data and earnings to look forward to," said ThinkMarkets analyst Fawad Razaqzada.
Meanwhile, investors remain concerned over just how much of US President-elect Joe Biden's stimulus package will be approved in Congress, ahead of his inauguration later this week.
The euro stood at USD1.2075 at the European equities close, down from USD1.2098. Against the yen, the dollar was trading at JPY103.70, marginally lower from JPY103.79 late Friday.
Analysts at ActivTrades said: "The euro is losing ground to the dollar during Monday trading. The coronavirus continues to wreak havoc across Europe, with the second wave of the pandemic testing healthcare systems and forcing prolonged new lockdowns that will probably cause a double-dip recession in the eurozone and delay the timing of the expected rebound in economic activity.
"On the other side of the Atlantic, fears persist of potentially violent protests during Joe Biden's inauguration, while several Republican lawmakers have voiced their disagreement with the proposed USD1.9 trillion fiscal stimulus package. It is therefore not surprising to see investors turning their backs on risk related currencies, such as the euro, and once again seeking the safety of the dollar."
Brent oil was quoted at USD54.90 a barrel at the equities close, broadly flat from USD54.87 at the close Friday. Gold was quoted at USD1,836.71 an ounce at the London equities close, slightly higher against USD1,832.20 late Friday.
The economic events calendar on Tuesday has Germany inflation readings at 0700 GMT and eurozone construction output at 1000 GMT.
The UK corporate calendar on Tuesday has trading statements from credit checking agency Experian, construction firm Kier Group and from Premier Foods.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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