Europe midday: Stocks in the red as basic resources drop

European stocks fell on Tuesday, with basic resources suffering the brunt of the losses following disappointing data from China.

At midday, the benchmark Stoxx Europe 600 index was down 1.1%, Germany’s DAX was down 1.3% and France’s CAC was 1.4% weaker.

“Taking their cue from yet more disappointing data from China, investors have seen enough from the recent bounce and are cashing out. Furthermore, with the ECB and Feb meetings on investors’ radars, they see little point in being too risk heavy in the face of potential market turbulence,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.

“However, while the VIX index remains low and commodities hold on to their gains there is the potential for more upside.”

Basic resources – which are highly dependent on Chinese demand – dropped sharply after data showed China’s trade performance last month was much worse than economists had been expecting, with exports and imports down more than forecast.

Exports fell 25.4% from the previous year to $126.1bn, compared with January’s 11.2% contraction. Imports, meanwhile, were down 13.8% to $93.5bn, compared with an 18.8% drop the previous month.

Oil prices also retreated after Kuwait said it would only agree to freeze output if all major producers take part. West Texas Intermediate was down 0.8% to $37.58 a barrel and Brent crude slipped 0.5% to $40.63.

The Stoxx 600 basic resources index slumped 3%, while the sub-index for oil and gas lost 1.1%.

Goldman Sachs said in a research note that the commodity rout was not over. “In the current supply-driven market, demand hasn’t really changed, it takes lower prices to push and keep supply below demand to create a deficit. As a result, higher prices are much harder to sustain in a supply-driven market since supply is primed to return with higher prices,” the bank said.

On the corporate front, Casino was in the red after US research firm Muddy Waters put out another scathing note on the French supermarket retailer.

Payment processor Worldpay, which listed on the London Stock Exchange last year, was under the cosh despite saying it swung to a pre-tax profit of £19.1m in 2015 compared with a £47.1m loss the previous year.

On the upside, shares in advertising agency WPP were higher after it put out a brief update in response to demand from investors and analysts saying like-for-like revenue and net sales growth were both “well over 3%” in February.

Luxury goods brand Burberry was a high riser following a press report it was seeking help to fight off a takeover bid.

On the data front, Eurostat revealed the Eurozone economy grew in line with analysts’ expectations in the fourth quarter.

Gross domestic product was confirmed at 0.3% quarter-on-quarter growth in the last three months of 2015, unchanged from the previous estimate.

Compared with the same quarter a year earlier, seasonally adjusted GDP increased 1.6% in the euro-area, up slightly from an earlier estimate of 1.5% year-on-year growth. Analysts had expected no change.

Data released earlier by the Economy Ministry showed German industrial production rose the most in more than six years in January, underpinned by strong domestic demand.

Adjusted for seasonal swings, industrial production rose 3.3% from the previous month following a 0.3% drop in December, beating economists’ expectations of a 0.5% increase. On the year, industrial production was up 2.2%, also beating forecasts.