FTSE tumbles at start of 2019 trading as China data disappoints

The FTSE 100 opened sharply lower on the first day of trading in 2019, extending last year's losses, after weaker than expected economic data from China dragged on Asian markets.

London's leading stock index fell more than 100 points, or 1.6%, to 6,620.71 in early trading on Wednesday.

Shares (Berlin: DI6.BE - news) partially recovered later in the session but were still down by about 40 points, or more than 0.5%, in midday trading.

It followed a turbulent end to 2018, which left the FTSE 100 12.5% lower compared to a year before - wiping more than £240bn off the value of its constituent companies over the 12-month period.

The decline was the biggest one-year fall since the financial crisis in 2008.

Wall Street futures also suggested stocks would open lower in New York.

Naeem Aslam, chief market analyst at Think Markets, said: "Global stock markets seem shaky on the first trading day of the year and still under the influence of the sell-off which we experienced in 2018.

"Investors are clearly concerned about the growth in 2019 and the lack of confidence is keeping them on the sidelines or they are feeling safer by parking their capital in risk-off assets."

While Brexit has been a concern for the UK, global markets have been rattled by US President Donald Trump's trade war with China and a government shutdown over the funding of a border wall with Mexico.

Mr Trump has also railed against the US Federal Reserve over interest rates.

The latest decline in global markets was triggered by weaker-than-expected Chinese manufacturing data, which contracted for the first time in 19 months.

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for December fell to 49.7, from 50.2 in November.

"The Chinese Caixin manufacturing number released today made investors more concerned about this as the number dipped below the critical point which differentiates the difference between contraction and expansion", Mr Aslam said.

"On the back of this number, investors followed one particular theme which spread from Hong Kong to Sydney- press the sell button only. Basically, for traders as long as the issues around the trade war between the US and China aren't resolved, they cannot think of a situation which can promote growth."

The Shanghai blue-chip index felll 1.2% and South Korea dipped 1.5%. The Hang Seng in Hong Kong slumped 2.7% and Sydney's S&P/ASX 200 dropped 1.6%.

Markets in France, Germany and Italy were also lower on Wednesday.

Japan's Nikkei 225 was closed for a holiday.