Stocks to start the week lower on China fears

Despite closing on Friday on a mild high, over the course of the week the FTSE still dropped nearly 1.8 per cent, managing along the way to close at its lowest level for five weeks, and it looks like the bears could resume control once again this morning.

GFT is quoting the FTSE 100 index to open down 10 points from Friday’s close, at a level of 5,886. Elsewhere in Europe the German Dax is called to open unchanged at 7,062, and the French CAC is quoted down 3 points to open at 4,014.

The latest prime culprit for the renewed selling pressure on equities is the lingering fear that the Chinese economy is overheating.

Figures for China’s Gross Domestic Product showed the country still charging along at an annual increase of 9.8 per cent, which also stoked fears that further monetary tightening measures from Beijing are in the offing.

Tomorrow sees the release of UK’s own GDP data for the fourth quarter, and traders may well err on the side of caution ahead of the announcement which follows a shockingly low retail sales figure last Friday, indicating that British retailers had the worst December ever – the cause being a chilly combination of the snow and soaring food prices.

Also today watch out for potential high volumes and some interesting swings on the first day of trading for the newly formed International Airlines Group, created by a merger of Spain’s Iberia and British Airways.

The new group forms Europe’s second-largest airline, and has already targeted further acquisitions, but investors may be put off by the threat of a fresh wave of strikes.

Martin Slaney is director of GFT’s global dealing operations