CLS Holdings Share News (CLI)

LONDON (Alliance News) - A heavy decline in Chinese export data suppressed UK stocks Tuesday, with blue-chip miners hit particularly hard due to their exposure to the health of the world's second largest economy.

Trade data, released Tuesday by the Chinese General Administration of Customs, showed China's trade performance deteriorated sharply in February, with both exports and imports declining more than expected by analysts.

Exports fell 25% from a year earlier in dollar terms, considerably worse than the 13% decline expected by economists and marking the biggest fall since May 2009. Imports, meanwhile dropped 14% year-on-year, extending declines for the 16th straight month, suggesting the country continued to suffer from weak global demand and a slowdown at home.

"This sharp decline in economic activity over the past month rather belies the recent rebound being seen in commodity prices, and puts this weekend's retail sales and industrial production data firmly in the cross hairs," said Michael Hewson, chief market analyst at CMC Markets.

"A similarly abysmal showing on these numbers will inevitably raise expectations of further easing measures from Chinese authorities," Hewson added.

Shore Capital analyst Yuen Low agreed, saying the deteriorating economic picture in the latest data out of China suggests that the rally in metal prices and UK mining stocks are unwarranted. China is the largest consumer of metal in the world.

"We had previously said that US Federal Reserve developments and Chinese seasonal buying would provide short-term support for metal prices, but we consider the recent rally to have become significantly overblown," Low said.

"Given recent Purchasing Manager's Index data and unofficial anecdotes we have been hearing, it seems clear to us that the economic situation in China is getting worse, rather than better," Shore's Low added.

Mining stocks were the amongst the worst performers in the FTSE 100 at midday, with Glencore down 9.2%, Anglo American down 9.0% and Rio Tinto down 6.1%.

The FTSE 350 Mining sector index was the worst performing sector index, down 6.1%, having posted seven consecutive sessions of gains before Tuesday.

At midday, the FTSE 100 index, in which miners have a heavy weighting, was down 0.8%, or 48.03 points, at 6,134.37.

The FTSE 250 traded down 1.0% at 16,664.48 points, and the AIM All-Share was down 0.2% at 702.56. In Europe, the French CAC 40 traded down 1.3% and the German DAX 30 was down 1.2%.

The eurozone economy grew as estimated in the fourth quarter, data from Eurostat showed. Gross domestic product climbed 0.3% quarter-on-quarter, in line with the estimate published on February 12. The economy also logged a 0.3% expansion in the third quarter.

On a yearly basis, GDP growth held steady at 1.6% in the fourth quarter but was revised up from the initial estimate of 1.5%.

Dennis de Jong, Managing Director at online forex broker UFX.com, said the eurozone GDP numbers are unlikely to excite many investors who have their sights set firmly on the European Central Bank's monetary policy decision on Thursday. The ECB is widely expected to ease policy to support the eurozone economy.

Ahead of the open on Wall Street, stock futures pointed lower. The Dow 30 was indicated down 0.5%, the S&P 500 down 0.6%, and the Nasdaq 100 down 0.7%.

Leading the fallers list in the blue-chip index was Worldpay Group, down 11%, even though it said it swung to a pretax profit in 2015 in its maiden set of results since becoming a publicly listed company.

Pretax profit amounted to GBP19.1 million in 2015, versus a pretax loss of GBP47.1 million in 2014, the payments processing company said. Worldpay processed 13.1 billion transactions in 2015, up 14% on the number processed in 2014, driving net revenue up by about the same percentage to GBP981.7 million.

Worldpay declared no dividend for 2015, in line with its guidance at the time of its IPO.

Burberry Group led the handful of blue-chip gainers, up 5.5%. The fashion house has sought help from its financial advisers to defend itself against a possible takeover bid after a mystery investor built up a 5.0% stake in the company, the Financial Times reported.

A person close to the company said Burberry had unsuccessfully attempted to obtain the identity of the investor from HSBC, which is listed as the custodian for the stake, according to the FT.

In the FTSE 250, banking, securities and asset management company Close Brothers Group lifted its interim dividend, reported an increase in first-half profit, and said it expects a "satisfactory performance" for its current financial year as a whole.

Pretax profit rose to GBP108.7 million in the six months ended January 31, Close Brothers said in a statement, up from GBP106.2 million the corresponding half the prior year. The financial company lifted its interim dividend to 19.0 pence from 18.0p

However, the Close Brothers was the worst performer in the FTSE 250, down 6.8%. Panmure Gordon and Numis cut their respective ratings on the company as both brokers struggled to find scope for the shares to re-rate further following a rally in the stock.

CLS Holdings' pretax profit fell in 2015, with the gain in the valuation of its property portfolio half what it was in 2014. The property investor reported pretax profit of GBP151.2 million for 2015, down from GBP236.8 million the previous year, as it registered a GBP98.0 million gain in the valuation of its property portfolio, compared to a GBP186.0 million gain in 2014.

However, CLS is proposing a tender offer buyback of 1 in 57 shares at 1,810 pence per share in April, with a plan to distribute GBP13.4 million to its shareholders, equivalent to 31.8 pence per share. This would bring total shareholder distributions for 2014 to GBP19.1 million, up 20% year-on-year. CLS said, effective Tuesday.

The stock was the best performer in the FTSE 250, up 2.9% to 1,606.00p.

On London's AIM market, RapidCloud International was up 36% after the cloud computing infrastructure provider said it has signed a strategic partnership for the South East Asian market with Alibaba.com Singapore E-commerce, a unit of Chinese e-commerce giant Alibaba Group.

Under the partnership, RapidCloud will be able to offer public cloud infrastructure, consulting, managed services, training and support from AliCloud, Alibaba's cloud computing division.

It is relatively quiet in economic calendar for rest of the day. The US Redbook index is due at 1355 GMT, while American Petroleum Institute crude oil stocks data are due at 2130 GMT.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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