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FTSE rises as Germany's first trade deficit since 1991 dims European stocks

·3 min read
The FTSE 100 started July on the front foot as stocks in Germany reversed early gains. Photo: Reuters/Hannibal Hanschke
The FTSE 100 started July on the front foot as stocks in Germany reversed early gains. Photo: Reuters/Hannibal Hanschke

European stocks were mixed on Monday as investors settle into trading in the second-half of the year following a brutal six months that were marred with worries over inflation, growth and the Ukraine war.

The FTSE 100 (^FTSE) surged 1.1%, France’s CAC (^FCHI) was 0.6% higher and the DAX (^GDAXI) fell 0.2% in Frankfurt.

It came as Germany's dependence on Russian gas imports hit government balance sheets in May.

Europe's largest economy reported its first monthly trade deficit in three decades after exports fell unexpectedly in May. The German economy is heavily focussed on exports.

The shortfall of €1bn ($1.043bn, £860m) was the first since 1991, with cross-border sales declining 0.5%. Meanwhile, imports rose 2.7%, higher than anticipated.

The number highlights the disruption sparked by Russia's invasion of Ukraine and China's continued pandemic lockdowns.

German imports from Russia declined by 9.8% in the period compared with April as Germany sought to lessen its reliance on gas from Moscow in retaliation to its war on Ukraine.

London's bluechip index was lifted by energy stalwarts Harbour Energy Plc (HBR.L), BP (BP.L), and Shell (SHEL.L), which rose 4.4%, 3.9%, and 3.4% respectively.

"The FTSE 100 is around 1% higher, given a lift by oil and oil stocks as Europe enjoys a quiet session thanks to the US holiday," said Chris Beauchamp, chief market analyst at online trading platform IG.

"European futures were looking strong at the beginning of the day but the session has seen continental Europe edge back while oil prices keep supporting the FTSE 100."

Read more: Inflation: More than six in 10 UK businesses set to raise prices

Across the pond, US benchmarks reversed some of their recent losses on Friday, closing higher after posting the worst first-half of any year since 1970.

Wall Street’s S&P 500 (^GSPC) advanced 39.95 points, or 1.1%, to 2825.33. The tech-heavy Nasdaq (^IXIC) added 0.9%, while the Dow Jones (^DJI) climbed 1.1% on Friday.

Trading volumes are expected to be subdued on Monday, with indices on Wall Street closed for the fourth of July Independence Day holiday.

In Asia, markets diverged overnight as stocks struggled for direction amid renewed coronavirus lockdowns in China and persistent concerns about a recession in America.

In Tokyo, the Nikkei (^N225) closed up 0.8%, while the Hang Seng (^HSI) drifted 0.3% lower in Hong Kong and the Shanghai Composite (000001.SS) gained 0.5%.

China reintroduced COVID lockdown measures in one country of Anhui province and renewed mass testing mandates in areas across the country as infections grow.

The affected regions included Wuxi, an eastern manufacturing hub which also suspended dine-in services at restaurants and advised people to work from home.

On Sunday, the country reported 385 new local cases of the virus, 290 of them in Anhui. China reported a total of 183 new cases the day before.

Watch: What is a recession and how do we spot one?