Europe midday: Stocks stay down as German, Chinese data weigh

European stocks were off their earlier lows but still weaker by midday on Wednesday as the latest Chinese trade and German industrial production data added to recessions woes.

The benchmark Stoxx 600 index was down 0.6%, while Germany’s DAX and France’s CAC 40 were both 0.4% lower.

Official customs data released earlier out of China showed that exports slowed markedly in August as global demand started to soften.

Exports rose by 7.1% year-on-year in August, compared to 18.0% in July; analysts had been expecting an increase of around 13.0%. Imports growth also slowed, to just 0.3% from 2.3% in July. Consensus was for growth of around 1.1%.

The trade balance was $79.39bn, compared to a record $101.26bn in July and a consensus forecast of $92.7bn.

Month-on-month, seasonally adjusted exports fell 6.4% - compared to 0.6% in July - while imports were down 4.8%.

Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: "We have been expecting weaker exports for some time, given the global slowdown evident in other country trade data, with China’s own data distorted by the Omicron lockdown and reopening. Subsidies for exporters have likely also played a role in delaying the inevitable.

"The weakness in imports, meanwhile, reflects the dire state of domestic demand, without which the trade surplus would be falling more rapidly.

"Export data by country reveals a broad-based slowdown in August - this was not driven by isolated pockets of demand weakness."

Closer to home, figures from Destatis showed that German industrial production fell a little less than expected in July.

Production declined 0.3% on the month following a revised 0.8% increase in June and versus expectations of a 0.5% fall. On the year, industrial output was down 1.1% in July following a 0.1% dip the month before.

Capital Economics said: “German industrial output fell a bit less than anticipated in July but that was mainly due to a rebound in construction activity and there were signs that manufacturing production is starting to be hit hard by the energy crisis.

“We continue to expect that a contraction in industrial output in the remainder of the year will contribute to plunging the German economy into recession.”

Investors were also mulling the latest comments from Russian president Vladimir Putin. According to reports, Putin has threatened to cut off energy supplies if price caps are imposed on Russia's oil and gas exports, warning the West that it would be "frozen" like a wolf's tail in a famous Russian fairy tale.

On the corporate front, Ubisoft tanked after China’s Tencent increased its investment in the French video game company, dashing takeover hopes.

Spain’s Repsol was also in focus after agreeing to sell a 25% stake in its oil and gas exploration and production unit to US fund EIG for $4.8bn.