London open: Stocks drop as China trade data disappoints; GVC hit by share sale

London stocks fell in early trade on Friday following the release of disappointing Chinese trade and German industrial figures, as investors eyed the release of the latest non-farm payrolls report.

At 1015 GMT, the FTSE 100 was down 0.8% at 7,098.24, while the pound was up 0.1% against the dollar at 1.3094 and flat versus the euro at 1.1688 as Prime Minister Theresa was set to make a last-ditch attempt to convince the EU to give her a better Brexit deal ahead of next week's Commons vote.

May was expected to use a speech in Grimsby to say that the government is determined to secure legally binding changes to the backstop.

Overall though, sentiment was knocked by data released overnight showing that dollar-denominated exports in China tumbled 20.7% in February from a year ago as the trade war with the US took its toll. This missed expectations for a 4.8% drop and was much worse than January's 9.1% increase.

Dollar-denominated imports were down 5.2% from a year ago, versus expectations for a 1.4% decline and a 1.5% year-on-year fall in January.

Spreadex analyst Connor Campbell said: "In a week dominated by slashed growth forecasts, news that China’s exports plunged 20% in dollar terms in February - more than four times greater than estimated - was hardly the kind of headline investors needed to wake up to.

"Combine that with a far worse than forecast German factory orders reading - they fell 2.6% against the expected 0.5% increase - and the European indices had no reason to reverse their recent losses."

On the year, German factory orders declined 3.9% from an upwardly-revised 4.5% drop in December, according to the figures released by Destatis.

The main focus on the macro front later will be the US non-farm payrolls report and unemployment rate due at 1330 GMT. Payrolls are expected to show that 180,000 jobs were added in February, compared to 304,000 the month before.

The unemployment rate is expected to tick down to 3.9% from 4%. Average earnings on a yearly basis are forecast to improve to 3.3% from 3.2%, while on monthly basis, the reading is tipped to be 0.3%, up from 0.1%.

Neil Wilson, chief market analyst at Markets.com, said: "One feels like the scales have tipped and now with the way the Fed has turned dovish due to the rollover in some of the data, a really strong number - particularly on wages as it will impact inflation expectations - could be negative for equities."

In UK stock markets, miners were under pressure on the back of the Chinese trade data, with Rio, BHP, Glencore and Antofagasta all lower.

Gambling operator GVC Holdings tanked after chief executive Kenneth Alexander sold £13.7m worth of shares in the company and chairman Lee Feldman ditched £6m worth.

Russ Mould, investment director at AJ Bell, said: "There is a widely used phrase in investing that says ‘follow the money’. In GVC’s case, shareholders are following this advice to the letter as the gambling company’s share price dives amid news of hefty share sales by directors.

"Investors are clearly spooked by this news and are also selling down. The two directors have pledged not to sell any more while they ‘continue’ at GVC. Investors may have read that statement as implying the pair aren’t going to be around that long."

Plastic packaging supplier RPC retreated as it agreed to be bought by plastics maker Berry Global for 793p per share in cash, abandoning an earlier offer from Apollo Global Management.

Outside the FTSE 350, shares in Debenhams were sharply higher after Sports Direct called an extraordinary shareholder meeting to remove all but one of the current board and to appoint the sports chain's founder Mike Ashley as its new boss.

The department store chain said it was "disappointed" with the move.

Sports Direct shares were a little weaker on the news.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "Debenhams is in dire straits already, and so the potential for change has been received positively by the market. We wouldn’t get too carried away with what the share price move means, the stock is small and targeted by short sellers, so any sort of news tends to lead to big price swings, up or down."

On the upside, Bodycote racked up impressive gains after it posted a 12% increase in full-year profit thanks to solid performances from its specialist technologies business, emerging markets and civil aviation, as it announced a special dividend.

Building materials company SIG surged as it reported a rise in full-year profit but warned that like-for-like sales in the first half of 2019 are likely to continuing declining amid "challenging" trading conditions.

In broker note action, Bunzl was hit by a downgrade to 'neutral' at Credit Suisse, while Just Eat was cut to 'neutral' at Citi.

Over-50s specialist Saga saw its shares slump after a downgrade to 'underweight' at JPMorgan.