London open: Stocks fall as China trade surplus shrinks

UK stocks declined on Tuesday morning after data showed Chinese exports fell more than expected in November.

Chinese exports dropped 6.8% last month compared to a year ago, marking the fifth consecutive month of decline. Analysts had predicted a 5% fall.

Imports decreased 8.7% in November, worse than the 11.8% drop expected.

The trade balance narrowed to $54.10bn from $61.64, missing estimates of $64.15bn.

“While the larger decline in exports is concerning, with weaker demand from abroad suggesting that the global slowdown is not abating, the imports data did offer cause for optimism,” said Craig Erlam, senior market analyst at Oanda.

“While the improvement may partially reflect last year’s sharp decline in commodity prices beginning to fall out of the annual comparison, it does also point to stronger domestic demand, a sign that fiscal and monetary stimulus measures are finally having the desired effect.”

On home turf, Halifax reported a 0.2% decline in UK house prices in November, compared to analysts’ expectations for a 0.2% increase and the previous month’s 1% rise.

Data at 0930 GMT is forecast to show industrial production rose 1.2% year-on-year in October and manufacturing output registered zero growth that month.

In the Eurozone, the final estimate of third quarter gross domestic product report at 1000 GMT will be in focus amid speculation of further stimulus by the European Central Bank next year.

Eurostat is expected to confirm GDP rose 0.3% quarter-on-quarter, down from 0.4% the previous three months. Annualised GDP for the three months to September is forecast to be unrevised at 1.6%, compared to 1.5% in the second quarter.

The ECB last Thursday decided to address the stagnant recovery by cutting the deposit rate by 10 basis points and extending the quantitative easing programme until March 2017 from September 2016. However, the central bank kept monthly asset purchases at €60bn, surprising analysts who had predicted an increase to about €75bn.

ECB President Mario Draghi sparked hopes of further QE in the future as he assured the market at the weekend that there was no “limit” to what the monetary authority could do if the outlook for economic growth and inflation should worsen.

In company news, Anglo American plunged after saying it will suspend its dividend to investors this year and the next as it announced a "radical" portfolio restructuring and further material costs savings and capex reductions to combat declining commodity prices.

Rio Tinto was in the red as the miner said 2016 group capital expenditure will be $1bn (£660m) less than forecast at $5bn (£3.3bn) as its cost cutting regime continues.

Fellow miners BHP Billiton and Glencore were also sitting lower on the FTSE as Chinese trade data added to concerns about the slowdown in the world’s second largest economy.

Going the other way, supermarkets were the top risers including J Sainsbury, Tesco and Morrison after a positive note from Bernstein. The broker said Aldi isn't able to maintain price leadership which is "good news for the big-4 for two reasons: firstly it demonstrates that Aldi will not cut prices forever and secondly it improves one of their major competitive advantages – you can get the brands you love.

"Sainsbury's maintains its best ever pricing on branded goods in November while Tesco relies on 'brand guarantee' to improve price reality but without having to continuously adjust prices. Morrisons has made good progress repositioning in branded and own label which is maintained this month."

Market Movers

FTSE 100 (UKX) 6,211.52 -0.19%
FTSE 250 (MCX) 17,343.85 -0.07%
techMARK (TASX) 3,225.85 0.31%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 250.30p 3.56%
Tesco (TSCO) 161.95p 3.15%
International Consolidated Airlines Group SA (CDI) (IAG) 598.50p 1.96%
Sage Group (SGE) 624.00p 1.63%
Morrison (Wm) Supermarkets (MRW) 148.00p 1.58%
easyJet (EZJ) 1,726.00p 1.23%
Standard Chartered (STAN) 529.80p 1.07%
Smith & Nephew (SN.) 1,127.00p 0.99%
Unilever (ULVR) 2,878.00p 0.91%
Shire Plc (SHP) 4,544.00p 0.87%

FTSE 100 - Fallers

BHP Billiton (BLT) 725.50p -5.19%
Glencore (GLEN) 81.32p -4.73%
Mondi (MNDI) 1,420.00p -4.63%
Anglo American (AAL) 352.00p -4.61%
Rio Tinto (RIO) 1,988.00p -3.78%
Antofagasta (ANTO) 465.00p -2.70%
Pearson (PSON) 758.50p -2.57%
Rolls-Royce Holdings (RR.) 597.00p -2.21%
BG Group (BG.) 964.40p -1.90%
G4S (GFS) 226.10p -1.57%

FTSE 250 - Risers

Lancashire Holdings Limited (LRE) 600.00p 3.54%
CLS Holdings (CLI) 1,785.00p 2.47%
Moneysupermarket.com Group (MONY) 329.10p 2.14%
Zoopla Property Group (WI) (ZPLA) 239.50p 1.91%
Wetherspoon (J.D.) (JDW) 768.50p 1.79%
Spire Healthcare Group (SPI) 310.40p 1.70%
Scottish Inv Trust (SCIN) 607.50p 1.59%
Caledonia Investments (CLDN) 2,370.00p 1.50%
JPMorgan American Inv Trust (JAM) 280.90p 1.41%
Booker Group (BOK) 183.60p 1.32%

FTSE 250 - Fallers

Entertainment One Limited (ETO) 160.20p -9.18%
Serco Group (SRP) 105.00p -3.93%
Kaz Minerals (KAZ) 99.10p -3.13%
Vedanta Resources (VED) 324.50p -2.99%
Tullow Oil (TLW) 167.70p -2.73%
Ophir Energy (OPHR) 87.55p -2.56%
Victrex plc (VCT) 1,848.00p -2.53%
Amec Foster Wheeler (AMFW) 390.30p -2.42%
Premier Oil (PMO) 56.45p -2.25%
Drax Group (DRX) 222.70p -2.15%