MARKET COMMENT: UK Shares Sunk By Greek Standoff, Chinese Imports

LONDON (Alliance News) - London stock indices closed broadly lower Monday, responding to weak Chinese import figures and continuing concerns the Greek debt situation, after the country's new prime minister delivered a defiant speech at the weekend.

The FTSE 100 ended down 0.2% at 6,837.15 points, having recovered some earlier losses in late trade. The FTSE 250 closed down 0.6% at 16,579.21, and the AIM All-Share ended off 0.2% at 699.23.

European stock indices also closed firmly in the red, with the French CAC 40 down 0.7%, and the German DAX 30 down 1.6%. At the close of European stock markets, New York was trading lower as well, with the Dow Jones Industrial Average down 0.2% and the S&P 500 and Nasdaq Composite both slightly lower.

Greek Prime Minister Alexis Tsipras reaffirmed that his government doesn't want an extension of the country's stringent debt bailout program and instead seeks a bridge loan. He also said his campaign against austerity is "irreversible" and his first priority is to tackle the big wounds of the bailout.

The debt bailout programme put in place for Greece by the European Commission, the European Central Bank and the IMF, the so-called Trioka, will expire on February 28. Greece has tried to renegotiate the bailout terms, but the EU has rejected the request, saying the bailout conditions were generous.

China's trade surplus rose to a record high in January as imports plunged at the fastest rate in more than five years and exports also unexpectedly declined, figures from the customs office showed Sunday. The trade surplus came in at USD60 billion in January, more than the USD48.20 billion expected by economists. In December, the surplus was USD49.61 billion. Exports fell 3.3% year-over-year in January, in contrast to the 5.8% rise expected by economists. Imports plunged 20%, much faster than the 3.2% drop forecast by economists. The decline in imports was the fastest since May 2009.

Despite the sharp fall in Chinese imports, mining stocks were amongst the best performers in the FTSE 100 as investors held out hope for more Chinese monetary or fiscal stimulus, according to Michael van Dulken, head of research at Accendo Markets.

"While the [surplus] news would normally see the natural resources focused names on the FTSE suffer, however, their relative buoyancy likely comes from expectations of more stimulus being forthcoming from Beijing (government or People's Bank of China) in order to keep GDP growth in the world’s number two economy at a level markets are comfortable with," van Dulken said.

Glencore, up 3.8%, Anglo American, up 3.4%, BHP Billiton, up 2.5%, Rio Tinto, up 2.2%, and Antofagasta, up 2.1% all were amongst the top blue-chip gainers.

Fresnillo, up 4.2%, the top gainer in the FTSE 100, and Randgold Resources, up 2.0%, also ended higher after the price of gold rebounded slightly from its decline Friday when it hit a low of USD1,228.17 due to dollar strength following a strong US non-farm payrolls report. The metal hit a high Monday of USD1,243.70.

In addition, Randgold Resources said pretax profit fell in 2014 on weaker gold prices but it raised its final dividend by 20% and said it is continuing to commit to "significant expenditure" in 2015.

Oil prices recovered some early intraday weaknesses after the Organisation of Petroleum Exporting Countries raised its demand forecast for its oil in 2015. The group said demand for its oil is expected to rise to about 29.21 million barrels per day in 2015, which is up by around 430,000 from its previous projection. OPEC also cut its estimate for non-OPEC supply growth by 420,000 barrels per day to average around 850,000 bpd in 2015, led by a reduction of 130,000 barrels per day in the US due to the slowdown in the shale boom.

At the end of London equity trade, Brent oil was trading at USD58.32 a barrel, while US benchmark West Texas Intermediate was at USD53.20 a barrel.

Oil related stocks performed well, with BG Group, up 3.0%, BP, up 1.4%, Royal Dutch Shell 'A', up 1.0%, and Tullow Oil, up 0.8%. In the FTSE 250, Hunting closed as the top gainer, up 10%, while Premier Oil, up 5.5%, Petrofac, up 4.9%, SOCO International, up 4.8%, and John Wood Group, up 4.2% also were top gainers in the index.

In the economic calendar Tuesday, Chinese consumer and producer prices for January are at 0130 GMT. UK industrial and manufacturing production for December is at 0930 GMT, the National Institute of Economic and Social Research's UK GDP estimate will be at 1500 GMT, and US wholesale inventories also are at 1500 GMT.

In the corporate calendar, specialty property/casualty insurer and reinsurer Catlin Group is scheduled to report its full-year results, housebuilder Bellway will provide a trading update, as will safety, health and environmental technology company Halma. Interdealer broker ICAP will issue a third-quarter interim management statement and Cable & Wireless Communications will release a trading statement.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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