European stocks lag after China’s growth figures underwhelm markets

The FTSE 100 closed 28.15 points, or 0.38%, lower at 7,406.42p.

European stocks started the week in the red (Nick Ansell/PA) (PA Archive)

European stocks had a downbeat start to the week as official data showed growth in China fell short of market expectations in the latest quarter.

The world’s second largest economy, behind only the US, saw gross domestic product (GDP) growth of 6.3% between April and June, compared with the same period a year ago.

The rate was behind economists’ expectations, and looking at the rate compared with the previous quarter, the economy edged up by just 0.8%.

UK stocks slipped amid the disappointing Chinese data, with gains for banking stocks offset by falls for miners.

The FTSE 100 closed 28.15 points, or 0.38%, lower at 7,406.42p.

China is a major consumer of commodities, and disappointing economic indicators typically drive down shares in miners and oil companies

Danni Hewson, AJ Bell

Danni Hewson, head of financial analysis at AJ Bell, said: “Dragging the index down were shares in miners and energy companies, suggesting nervousness around commodity markets and the global economy.

“Weighing on sentiment were weaker-than-expected GDP figures from China, coming in at 6.3% in the second quarter versus a consensus of 7.3%.

“China is a major consumer of commodities, and disappointing economic indicators typically drive down shares in miners and oil companies for fear that demand for metals, minerals and energy products will be lower than previously hoped.”

The mood was reciprocated elsewhere in Europe, with France’s Cac 40 dropping 1.12% and Germany’s Dax dipping by 0.23%.

Top stocks in the US had a stronger start to the week. The S&P 500 was up by 0.3% and the Dow Jones 0.2% higher by the time European markets closed.

The pound lagged after reaching highs of more than a year against the US dollar last week. It was down 0.1% to 1.31 US dollars, and down 0.2% against the euro to 1.164.

The price of Brent crude oil dropped by 1.3% to 78.8 US dollars per barrel.

In company news, sofa seller DFS saw shares rise despite sliding sales after it told investors that cost-cutting actions were helping to limit the hit to profits.

The London-listed retailer reported a 4% drop in gross sales for the year to June 25, with consumer spending on big ticket items such as sofas dented by the cost-of-living crisis, but said profits were in line with expectations. As a result, it saw shares finish 6p higher at 119.8p.

Asset management firm Gresham House shot higher after it agreed a takeover by US investment firm Searchlight Capital Partners.

Gresham said it had sealed a £469.8 million deal from the suitor after a bid of 1,105p per share to buy the firm, which manages around £8 billion in assets across the UK, Ireland, Australia and other markets. Shares in the company jumped by 380p to 1,060p at the close of trading.

Tortilla Mexican Grill investors warmed up to a steady trading update on Monday, as the restaurant chain posted a 22% increase in revenues over the first half of the year, boosted by new openings.

The company’s shares improved by 1.5p to 83p after Tortilla said efficiency and cost-saving efforts would continue to support profit into the second half of the year.

The biggest risers on the FTSE 100 were Spirax-Sarco Engineering, up 220p to 10,675p, Rentokil, up 9.6p to 623.2p, NatWest Group, up 3.6p to 246.6p, Compass Group, up 31p to 2,124p, and Pershing Square Holdings, up 32p to 2,190p.

The biggest fallers were Coca-Cola HBC, down 102p to 2,330p, Flutter Entertainment, down 550p to 15,435p, Glencore, down 13.15p to 453.65p, Anglo American, down 58.5p to 2,290.5p, and Antofagasta, down 38p to 1,499p.