Europe open: Resources pace the decline after weak China data

European stocks fell in early trade, with basic resources pacing the decline following weak Chinese trade data, as investors digested the latest minutes from the Federal Reserve.

At 0850 BST, the benchmark Stoxx Europe 600 index was down 1%, Germany’s DAX was off 1.3% and France’s CAC 40 was 1.4% weaker.

In currency markets, the pound was down 0.3% versus the dollar at $1.2159.

Meanwhile, oil prices slipped back after OPEC said oil production in September rose to its highest level in eight years. West Texas Intermediate was down 1% at $49.69 a barrel and Brent crude was 0.8% lower at $51.39.

Minutes of the Fed’s 20-21 September meeting showed it was a “close call” to keep rates on hold, with policymakers generally of the view that a move higher could be on the cards within months if the economy keeps on track.

Sentiment also took a hit from disappointing Chinese trade data, which weighed on the mining sector, pushing the Stoxx 600 basic resources index down nearly 3%.

Figures released earlier showed Chinese exports and imports in September missed expectations, with exports down 10% in dollar terms year-on-year and imports down 1.9%. Economists had been expecting 3% drop in exports and a 1% rise in imports.

In yuan terms, exports were 5.6% lower on the year, while imports were up 2.2%.

Lee Wild, heady of equity strategy at stockbroker Interactive Investor, said the market had already pencilled in a December hike, so finding out that September was a close call was not a needle mover.

“Fears about the global economy are. Overnight data shows Chinese exports fell 10% last month, much more than expected. Imports in dollar terms were down, too, proving August's surprise increase was a one-off. Expect the Chinese currency to devalue further, which could have a major impact on demand for commodities and imported goods.

“Oil prices are already lower Thursday, although figures showing producers are pumping like crazy to beat a possible cut in output is hurting here. An extra 220,000 barrels a day left the ground last month as oil nations fill their boots before OPEC’s meeting in Vienna next month. If a cut doesn't happen - and there are no guarantees with OPEC - prices will fall much further.”

In corporate news, Unilever was under pressure after a storm broke over a supermarket pricing dispute over Marmite and several other of its brands, although the group reported solid underlying sales amid tough third-quarter conditions.

The dispute was with Tesco, whose shares declined on Thursday.

On the upside, subscription broadcaster and broadband provider Sky was in the black after saying first-quarter group revenue rose 7%, while WH Smith gained ground after reporting an 8% rise in pre-tax profit for the year to the end of August.

ProSiebenSat.1 Media was also higher after it lifted its 2016 and 2018 sales projections.