London close: Stocks end 2018 with a whimper; FTSE down 12% for the year

London stocks ended 2018 with a whimper rather a bang on Monday, as investors weighed up signs of improving relations between the US and China against disappointing Chinese manufacturing data, amid a dearth of UK corporate and macroeconomic news flow.

The FTSE 100 closed down 0.1% at 6,728.13, ending around its lowest level since the Brexit vote and with the index down 12% since the start of 2018 - its worst year since the 2008 financial crisis - as worries about Brexit, global trade and global economic growth took their toll.

A strengthening pound weighed on the top-flight index, with sterling up 0.7% against the dollar at 1.2788 and 0.6% firmer versus the euro at 1.1165 following reports that the Brexit deadline could be pushed back if Prime Minister Theresa May’s deal gets voted down by Parliament. Meanwhile, International Trade Secretary Liam Fox said in a Sunday Times interview that the chances of Britain leaving the EU were 50-50 if Parliament rejects May’s withdrawal agreement.

Parliament is set to vote on the Brexit deal in the week starting 14 January.

Indications of improving Sino-US relations provided some cheer after US President Donald Trump hailed trade progress over the weekend.

Trump tweeted on Saturday: "Just had a long and very good call with President Xi of China. Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!"

After the tweet, the Wall Street Journal cited sources familiar with the negotiations as saying that Trump "may be overstating how close the two sides are to an agreement". However, a statement on Sunday from Lu Kang, the spokesperson for China’s foreign ministry, seemed to confirm Trump's trade optimism.

"China stands ready to work with the US to implement the important consensus reached by President Xi Jinping and President Trump in Argentinaa, expand co-operation on the basis of mutual benefit, manage differences on the basis of mutual respect," Lu said.

On the downside, however, Chinese manufacturing figures disappointed. The National Bureau of Statistics’ official manufacturing purchasing managers’ index printed at 49.4 this month from 50.0 in November, falling short of expectations for a reading of 49.9 and marking the lowest level since February 2016.

Meanwhile, the sub-index for total new orders declined to 49.7 in December from 50.4 the month before, moving into contraction territory and hitting its lowest level since February 2016, while the sub-index for production fell to 50.8 from 51.9 in November.

Joshua Mahony, market analyst at IG, said: "The final trading day of 2018 has been dominated by the plight of the Chinese economy, with the release of mixed PMI surveys accompanied by positive shifts in the rhetoric surrounding trade talks with the US.

"Unfortunately, despite improving rhetoric around U-China trade talks, today’s PMI surveys highlighted the ongoing suffering for Chinese manufacturing, with the sector moving into contraction for the first time in over two-years. Interestingly, while we are seeing manufacturing in decline, the services sector is picking up some of that slack, with the sector is expansion territory since 2012. The US-China trade war has certainly been to the detriment of Chinese exports, yet to some extent it has helped drive the reallocation of the economy towards domestic consumption and demand for services."

Market Movers

FTSE 100 (UKX) 6,728.13 -0.09%
FTSE 250 (MCX) 17,502.05 0.21%
techMARK (TASX) 3,309.80 0.10%

FTSE 100 - Risers

Ocado Group (OCDO) 790.00p 2.86%
Rentokil Initial (RTO) 335.20p 2.51%
Micro Focus International (MCRO) 1,381.00p 2.07%
InterContinental Hotels Group (IHG) 4,227.00p 2.00%
SSE (SSE) 1,081.50p 1.98%
Berkeley Group Holdings (The) (BKG) 3,479.00p 1.78%
NMC Health (NMC) 2,752.00p 1.62%
Rolls-Royce Holdings (RR.) 830.00p 1.52%
Halma (HLMA) 1,364.00p 1.49%
Standard Chartered (STAN) 609.30p 1.38%

FTSE 100 - Fallers

3i Group (III) 773.40p -2.77%
British American Tobacco (BATS) 2,505.50p -2.47%
Next (NXT) 3,979.00p -1.70%
Evraz (EVR) 478.90p -1.24%
BP (BP.) 496.50p -1.23%
Vodafone Group (VOD) 152.68p -1.23%
Reckitt Benckiser Group (RB.) 5,994.00p -1.19%
Sage Group (SGE) 598.40p -1.12%
Tesco (TSCO) 190.05p -1.07%
GVC Holdings (GVC) 674.00p -1.03%

FTSE 250 - Risers

Premier Oil (PMO) 66.40p 9.03%
Funding Circle Holdings (FCH) 345.00p 6.02%
Bakkavor Group (BAKK) 139.40p 5.45%
888 Holdings (888) 175.40p 4.72%
Games Workshop Group (GAW) 3,040.00p 4.11%
Sophos Group (SOPH) 378.60p 3.95%
Cineworld Group (CINE) 264.00p 3.86%
Auto Trader Group (AUTO) 454.80p 3.22%
Softcat (SCT) 591.00p 3.14%
Ultra Electronics Holdings (ULE) 1,300.00p 3.09%

FTSE 250 - Fallers

Amigo Holdings (AMGO) 283.30p -4.77%
Acacia Mining (ACA) 183.30p -3.93%
Fisher (James) & Sons (FSJ) 1,700.00p -3.08%
FDM Group (Holdings) (FDM) 745.00p -2.87%
Hochschild Mining (HOC) 156.05p -2.47%
Genus (GNS) 2,138.00p -2.37%
CYBG (CYBG) 181.70p -2.31%
F&C Commercial Property Trust Ltd. (FCPT) 124.68p -2.29%
William Hill (WMH) 154.80p -2.15%
Hilton Food Group (HFG) 908.00p -1.94%