Oil slides as US crude stocks rise, taking shine off markets – as it happened

All the day's financial news, as China defies pessimism by reporting a surprise rise in exports in December

• Chinese trade figures beat forecasts...
• ...assuming they're accurate
• But Shanghai market falls 2%
• European markets rising

5.43pm GMT

Better than expected Chinese trade data gave stock markets an early lift, but they came off their best levels thanks to a slide in oil prices after US figures showed a rise in crude inventories. Brent is now down 1.3% at $30.46 a barrel having earlier climbed to $31.92. Most European markets managed to end the day higher, but Germany was an exception and finished slightly lower, while Wall Street has now turned negative. The final scores in Europe showed:

5.12pm GMT

Ahead of Thursday's Bank of England interest rate announcement - when no change is pretty much nailed on - sterling dropped to a new five and a half year low of $1.4380 before recovering to $1.4455.

Recent week data has suggested that an interest rate rise is now not likely until towards the end of the year, in contrast to the US Federal Reserve which has already made its first increase. Sterling has now lost around 6% in just a month, on concerns about the strength of the UK economy.

4.12pm GMT

Joshua Mahony, market analyst at IG, said:

In yet another reflection of the fragility of financial markets, what was expected to be a rare green day for the FTSE is becoming increasingly likely to turn red once more, as oil prices tumble in the wake of the US crude inventory number. A mix of strong Chinese trade data overnight, and an indication that Russian crude output could be cut in the coming months, managed to provide a lift with US crude prices rising relatively calmly and consistently.

However, much like a house of cards, something that took the whole day to build has been blown down in the space of five minutes. The fact that a lower than expected US crude inventories figure would typically be supportive for oil prices goes to show that for now the oil market is finding buyers hard to come by in the face of such intense selling.

4.02pm GMT

The US figures also show that weekly gasoline stocks have jumped 8.4m barrels to 240.43m, compared to forecasts of a 2.7m increase. This is reportedly the biggest two week rise on record, and points to continuing weak demand. Another reason for the fall in crude prices once the figures were released.

The EIA said:

Total motor gasoline inventories increased by 8.4 million barrels last week, and are above the upper limit of the average range.

3.45pm GMT

Brent crude, which had earlier jumped as high as $31.92, has now slipped back 0.8% to $30.60 a barrel. US oil has dipped to as low as $30.31.

US crude inventories show negligible build but not good enough for oil, which down again, dragging stocks back in the red alongside CAD

3.40pm GMT

Oil prices have slipped back after US crude stocks showed a weekly rise to levels not seen at this time of year for 80 years.

The increase of 0.2m barrels was less than the forecast rise of 2.5m barrels but the Energy Information Administration figures contrast with those of the American Petroleum Institute, which said on Tuesday that crude stocks had unexpectedly fallen.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.2 million barrels from the previous week. At 482.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years.

U.S. commercial crude #oil inventories week ending 1/08/2016 UP 0.2 MMbbl, refinery utilization= 91.2% https://t.co/uOvC638dQR #energy

#Crude falls as contrary to the API, the EIA reports a small build of 0.2 million barrels in inventories ^FR #CL_F #WTI

3.02pm GMT

The US has followed other global markets by recording an opening rise, although it is not a particularly convincing one.

The Dow Jones Industrial Average is up around 53 points or 0.3%, while the S&P 500 has climbed by a similar amount.

2.42pm GMT

Meanwhile former US Treasury Secretary Lawrence Summers has told Bloomberg TV that he would be surprised if the world economy could comfortably withstand four hikes. He said:

And I think that basically markets agree with me. And that's why despite the statements that are being made, markets aren't expecting four hikes.

If you ask if there are risk that we're going to find ourselves in a situation within the next two years where policy is going to have to reverse, yes. I think that is a significant risk.

2.24pm GMT

Rosengren also said (as reported by Reuters) that US central bankers faced challenges by hiking rates when other central banks were still easing (eg the ECB).

He said this divergence of policy could make foreign exchange trading "more volatile."

2.12pm GMT

Following December's interest rate rise by the US Federal Reserve, attention turned almost immediately to when the next one would be, and how many there could be in 2016 in total.

The Fed indicated when it sanctioned dearer borrowing costs that there could be four quarter-point rises over the course of 2016. But since its December meeting things have changed somewhat, especially in China, and worries about a slowdown in global growth have increased.

I hope the economy continues to improve, so that further normalization is appropriate. It is important, however, to carefully manage risks to the economy, including those emanating from abroad. Further increases in rates are in my view likely to be gradual.

While monetary policy should not overreact to short-term temporary fluctuations in financial markets, policy makers should take seriously the potential downside risk to their economic forecasts and manage those risks as we think about the appropriate path...

1.56pm GMT

Here's a chart from Bloomberg showing the best and worst stock markets so far this year (yes, all 13 days of it):

The world's best and worst performing stock exchanges this year. Chinese, Saudi & Nigerian stocks are the laggards. pic.twitter.com/FUDU08tNUu

1.52pm GMT

We had figures earlier showing that Greek inflation was rising faster than the eurozone average, and now Barclays had reduced its eurozone forecasts:

Barclays cuts Eurozone 2016 headline CPI forecast to 0.1% from 0.5% with downside risks of additional -0.4% o/a weaker energy, food, goods.

Europe's weakening #inflation outlook spurs calls for #ECB action https://t.co/XQg8KfIO6a via @eshelouise pic.twitter.com/26K6eP30s3

1.45pm GMT

City experts have been falling over themselves to predict how fall the oil price will fall, with Standard Chartered's $10 a barrel the outlier at the moment.

But the latest odds from Ladbrokes suggest that may be a step too far.

1.12pm GMT

More scepticism over the Chinese trade data. Sanjiv Shah, chief investment officer at Sun Global Investments, said:

The higher export data may in part reflect past false transactions designed to overcome restrictions on transfers of currency outside the country. Recent data has shown sharp declines in foreign exchange reserves and independent estimates indicate a sharp increase in capital outflows in October and November. This means the level of exports in October and November may have been understated and the increase in exports in December is more apparent than real.

However, if there has been a true and sustainable recovery in exports, this may relieve some of the pressure on yuan to weaken. It is too early to say that the decline in the yuan has led to a sustainable increase in China's competitiveness and therefore a healthier path for Chinese exports.

12.44pm GMT

Over to Greece, and the European Central Bank will only start buying the country's debt as part of its asset purchase scheme if Greece shows a strong commitment to its bailout programme.

That comes from ECB president Mario Draghi ahead of a first review of the Greek programme due to start later this month. Reuters reports:

Draghi added that even if the ECB waived the minimum credit rating requirement for Greek debt, the timing of possible asset purchases also depended on a set of additional factors linked to the program reviews and would be subject to various purchase limits.

The Greek central bank earlier said that reinstating the waiver was on the agenda, raising hopes that Greece could soon be included in the ECB's quantitative easing program.

12.23pm GMT

The better than expected Chinese trade data has lifted European markets, with commodity companies leading the way.

Oil has moved higher after briefly falling below $30 a barrel on Tuesday, with Brent crude now up nearly 2% at $31.46.

11.40am GMT

Greece's long deflationary spiral is over.

Greek consumer prices rose by 0.4% annually in December (on a harmonised basis) which is the first upward move since February 2013.

10.58am GMT

Thousands of jobs are being axed across Europe by General Electric, including in Germany, the UK and France.

The US engineering giant is cutting staff following its acquisition of French firm Alstom's energy division.

"Any potential job that will be impacted in France will have to be replaced at the end of the period.

"These positions, if we cancel them, will have to be recreated in addition to the 1,000 we promised to create."

General Electric To Cut Up To 660 UK Jobs https://t.co/0Ad8428wR8 pic.twitter.com/bJKTIS34o5

10.20am GMT

Oh dear. Eurozone factories suffered falling output last November, according to the latest data from the region.

Industrial output contracted by 0.7% during the month, reversing a recovery in October.

Production of energy fell by 4.3%, capital goods by 1.9% and durable consumer goods by 1.0%, while production of non-durable consumer goods rose by 0.1% and intermediate goods by 0.7%.

Euro area industrial production -0.7% in Nov 15 over Oct 15, +1.1% over Nov 14 #Eurostat https://t.co/3AQbkwe8R0 pic.twitter.com/XhMgtwKYAK

10.01am GMT

Fictional cat Mog should be lapping up a saucer of gold top milk this morning, after helping Sainsbury's beat City forecasts over Christmas.

The advert was viewed almost 37m times online and sales of a book and soft toy raised more than 1.5m for Save the Children, Sainsbury's said.

Related: Sainsbury's Christmas sales better than expected

9.46am GMT

Commodities are rallying this morning, pushing up the price of oil, copper, platinum and copper.

Only gold is lagging, having benefitted from recent anxiety.

Commodities up. Look at all the pretty green numbers. https://t.co/30BYWZCe4C pic.twitter.com/cTTaeqxem8

9.39am GMT

Today's China trade data should reassure some nervous investors, says Tom Rafferty of the Economist Intelligence Unit, despite question marks over their accuracy.

The data is in line with other indicators that suggest China's economy is stabilising on the back of sustained stimulus measures, some of which have been targeted at the external sector.

There will be some qualms expressed about the reliability of the data, given the weaker performance in December of other major Asian exporters. However, China has consistently outperformed the region in what was a difficult year for global trade.

Although cautious about trade prospects for 2016, but we expect a modest pick-up in global demand and a weaker renminbi to help lift China's export value growth to 2%, folllowing the contraction last year. We forecast import value growth of 4% as domestic demand stabilises and distortions caused by the oil price fall in late 2014 drop out of the base comparison.

9.32am GMT

Now this is important..... investors are anticipating that oil will remain low for several years.

That's via Bloomberg's oil expert, Javier Blas:

Far less noticed than #oil spot prices, but more crucial: Brent 5-year forward contract plunges to $50 a barrel pic.twitter.com/seTPrQjn9Q

9.25am GMT

Troubled mining company Anglo American is the top riser in London, as the Footsie clambers back over the 6,000 point mark for the first time this week.

$FTSE back to 6000

8.51am GMT

The surprise 2.4% jump in Chinese exports last month suggests that the manufacturers are benefitting from a cheaper currency.

And that might lead Beijing to conclude that they shouldn't worry about the yuan weakening:

I can't help wondering if the positive response to a bounce in yuan-denominated export growth that is a reward for the Yuan depreciation strategy, won't just encourage more of the same.

If a weaker currency pays dividends for China, as it did for others, then chances are, we'll see more competitive devaluation in the months ahead across Asia.

8.50am GMT

Another difficult day for stock markets in China as the Shanghai Composite breaks the 3000 barrier and falls 2% to 2950

8.36am GMT

Oil is staging a recovery this morning too, having hit 12-year lows yesterday.

US crude oil has gained almost 2% to $30.97 per barrel, having plunged below the thirty dollar mark last night.

Oil bounces back after hitting $29.93 - here's a recap of what happened https://t.co/AgqIyjtNKq pic.twitter.com/RZOlTzypE8

8.28am GMT

European stock markets are rallying in early trading, as relief over China's trade figures ripples through the City.

In London, the FTSE 100 has gained 64 points, or 1%, to 5992. Mining companies are among the risers.

This gives hope to the bulls that a bottom has been found and a short-term reversal is on the cards.

8.11am GMT

Cynical City types often question whether China's economic data can really be trusted, given the sheer challenge of assessing its economy (and the fear that officials could massage the figures to avoid causing ructions).

And today's trade report does include one curious element - a 10% surge in exports to Hong Kong.

China export data might be lifting global markets this morning but check out the Honk Kong numbers. Exports to HK greater than to US #odd

China capital outflow exports: on absolute basis, Dec "exports" to HK 2nd highest ever. Hello fake trade invoicing! pic.twitter.com/Z8Tpbdq5Dt

Economists said the surprise gains may harken back to past instances of phony invoicing and other rules skirted to escape currency rules. China's government said in 2013 said some data on trade with Hong Kong were inflated by arbitrage transactions intended to avoid rules, an acknowledgment that export and import figures were overstated.

The increase in exports to Hong Kong and China's imports from the city probably indicate "fake invoicing," said Iris Pang, a senior economist for Greater China at Natixis SA in Hong Kong. Invoicing of China trade should be larger in December because of the wider gap between the onshore yuan and the offshore yuan traded in Hong Kong, she said.

7.56am GMT

Other Asian markets have performed well today, with Japan's Nikkei jumping by almost 3%.

It does appear that investors are a little less anxious about the state of the world economy today, after such a rough start to 2016.

7.52am GMT

CHINA SHANGHAI COMPOSITE INDEX CLOSES DOWN 2.42% AT 2,949.60

7.48am GMT

The Chinese stock market has suffered fresh losses today, despite today's forecast-beating trade figures.

A late sell-off leaves Shanghai stocks sitting just 0.8% above August's bear market low https://t.co/YxXLXn1YFM pic.twitter.com/EXvJdI9GA9

7.37am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.

While Europe was sleeping, China has wrong-footed analysts by reporting better-than-expected trade figures.

#BREAKING China releases trade data for December in CNY. Exports unexpectedly rebound 2.3%, imports drop less than expected at -4%

Customs spokesman Huang Songping warned at a news conference that China's trade faced "many challenges" in 2016 due to weak external demand, Reuters reported.

One of the main reasons for China's lower exports in 2015 was weak external demand, he added. The 5% fall in the value of the yuan since last August had helped support exports but the impact would begin to fade, he said.

Our European opening calls: $FTSE 5977 up 48 $DAX 10112 up 127 $CAC 4426 up 47 $IBEX 9002 up 87 $MIB 20133 up 163

Sainsbury's results - sales down slightly at stores open at least a year exc fuel - down 0.4% for 15 wks to Jan 9