Thursday 14 December 2017

Miners lead Euro stocks down after China growth loses steam

David Brett

MINING stocks were among the top fallers as European shares edged lower today, dragged down by weak data from China, the world's largest consumer of raw materials.

Drug firm Elan bucked the trend by climbing 2.5pc after rejecting an increased offer from Royalty Pharma, saying it was assessing enquiries from other interested parties.

The Miners fell 1.1pc after data showed growth in the world's second-largest economy was losing momentum, heaping pressure on the earnings outlook for a sector which has already lagged the market by almost 20pc in 2013.

Chinese imports fell 0.3pc against expectations for a 6pc rise, and the volume of major metals imports, including copper and alumina, fell at double-digit rates in unexpectedly weak data released at the weekend.

The UK's FTSE 100, which has a large exposure to the mining sector, was Europe's weakest market, down 0.2pc.

By 0732 GMT, the FTSEurofirst was down 0.81 points, or 0.1pc, at 1,193.45, having rallied sharply on Friday. It market is expected to remain volatile ahead of the Federal Reserve's monthly meeting next week, which may bring more clues on the outlook for its economic stimulus.

"Although we believe the FOMC will back continued stimulus, contrasting comments from various Federal Reserve Bank leaders across the US persist in adding to volatility," said Mark Ward, head of trading at Sanlam Securities.

Volatility in European shares spiked last week on growing worries that the US central bank will unwinding its stimulus programme while Europe is still struggling for growth.

Investors withdrew record amount of funds from bonds and equities last week, EPFR data showed.

JP Morgan Strategist Mislav Matejka said the recent sell-off in equities - the FTSEurofirst 300 is down 5pc in the last 12 days - could encourage investors scared off by the sharp rally over the last year to re-enter the market.

"The underlying market fundamentals remain positive. We do not think market weakness will morph into a significant sell-off and stay in buying-the-dips mode," he said.

Meanwhile, AstraZeneca said it would buy US respiratory drug specialist Pearl Therapeutics for up to $1.15 billion as part of a drive to rebuild its product pipeline via deal-making.

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