Global stock markets lose ground as Chinese industry reels

Global stock markets dipped on Monday, as fears over the health of China’s economy unnerved investors.

Limp Chinese economic data released over the weekend led shares lower across bourses in Asia and Europe, as Europe’s traders returned to their desks for the first time since the Christmas holiday.

Profits of Chinese industrial companies fell by 1.4pc in November, compared with the same month a year earlier, extending their declines for a sixth straight month. China’s leading index, the Shanghai Composite, fell by 2.6pc as traders had their first opportunity to react to the news.

The data covered producers with revenues in excess of 20m yuan (£2.1m) from their main operations. Their profits have dropped by 1.9pc in the first 11 months of the year compared with the same period last year, according to the country’s National Bureau of Statistics.

Miners were among the worst hit with a 56.5pc drop in profits for the year so far, as a renewed slump in commodity prices has dented margins. The data added to fears that the world’s second largest economy is struggling to maintain its recent pace of growth.

European markets were affected by the malaise in China, as traders had little other news to digest on a thin day of trading. France’s Cac dropped by 0.5pc, as Germany’s Dax slipped 0.3pc. The London Stock Exchange was shut on Monday for a bank holiday.

While there is little in the way of newsflow scheduled for the remainder of the week, volatility can be expected to pick up, according to Marshall Gittler, of FXPrimus.

"There could be some sudden moves though as small orders can move the market unpredictably," he said, as on average the first and last weeks of the year are the most volatile in financial markets.