FTSE 100 closed lower, halts two-day advance

U.K. stocks ended modestly lower Monday as disappointing Chinese trade data outweighed hopes the Federal Reserve will not raise rates next month.

The FTSE 100 index  fell 0.2% to end at 6,114.81, dropping after two straight sessions of gains.

U.K. stocks had climbed in morning action. Investors were encouraged by a positive close in the U.S. on Friday that came after weaker-than-expected labor data zapped expectations the Fed will raise interest rates in June.

But then mining firms hit the FTSE hard as Chinese export and import data renewed fears about growth in the world’s second-largest economy. Exports fell 1.8% year-over-year in April, while imports slumped 10.9%. The data suggest global demand for Chinese goods is waning, but also that the domestic economy is slowing.

Shares of Anglo American PLC lost 14%, Glencore PLC dropped 9%, Rio Tinto PLC fell 7.9% and BHP Billiton PLC gave up 6.1%.

“Given the substantial rerating in mining firms since the February low, it was always going to be difficult to sustain the rally without at least a modest correction,” said Chris Beauchamp, senior market analyst at IG, in a note. “The yo-yoing of iron ore prices has provided a perfect excuse for momentum traders to book profits and flee to safer pastures.”

Among Monday’s notable gainers, EasyJet PLC’s stock closed up 3.8% after RBC Capital Markets lifted the budget airliner to outperform from underperform, according to Dow Jones Newswires.

Smith & Nephew PLC added 2.6% after Jefferies raised the medical supplies maker to buy from hold, saying the company now has a leading position in higher-growth segments.

The pound slid to $1.4400 from $1.4427 late Friday in New York after media reports the Bank of England is preparing to cut interest rates if the U.K. votes to leave the European Union at the so-called Brexit referendum in June.

The BOE announces its latest rate decision on Thursday and is widely expected to keep its benchmark interest rate at a record low of 0.5% where it has stood since March 2009.

On Friday, U.K. stocks eked out a small gain, but ended the holiday-shortened week off 1.9%.

Source: MarketWatch