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LONDON (Reuters) – Global stock markets and commodities took a hit on Monday after a shock contraction in Chinese trade pointed to deepening cracks in the world’s second-largest economy and sparked fears of a sharper slowdown in global growth.

Data from China showed imports fell 7.6 percent year-on-year in December while analysts had predicted a 5 percent rise. Exports dropped 4.4 percent, confounding expectations for a 3 percent gain.

The data reinforced fears U.S. tariffs on Chinese goods were starting to hit China’s cooling economy, while softening demand has been felt around the world with sales of goods ranging from iPhones to automobiles slowing, prompting profit warnings from Apple among others.

Adding to the gloom were weak industrial output numbers from the euro zone, which posted their largest fall in nearly three years.

The index of Europe’s leading 300 shares .FTEU3 fell 0.9 percent by noon in London. Germany’s DAX .GDAXI and France’s CAC .FCHI were down over half a percent and 0.9 percent respectively, with shares in European luxury goods companies and the automotive sector suffering some of the biggest declines.

The falls in Europe followed hefty declines in Asia where MSCI’s broadest index of Asia-Pacific ex-Japan shares lost around 1 percent from Friday’s 1-1/2 month high – its biggest single-day percentage drop since Jan. 2. Chinese .CSI300 and Hong Kong shares .HIS suffered the worst hits.

U.S. futures showed no let-up on the horizon, with Nasdaq e-mini futures NQc1 pointing to falls over 1 percent for tech stocks while industrials YMc1 looked set to open 0.9 percent softer.

The prospect of slowing global growth also roiled commodity markets, with oil prices slipping over 1 percent. Industrial metals copper CMCU3 and aluminum lost ground in London and Shanghai.

Safe-haven trades benefited from the equity pullback with U.S. 10-year Treasury yields falling to as low as 2.6690 percent – their lowest level in a week – while gold prices gained.

(Reuters) – More U.S. coal-fired power plants were shut in President Donald Trump’s first two years than were retired in the whole of Barack Obama’s first term, despite the Republican’s efforts to prop up the industry to keep a campaign promise to coal-mining states.

In total, more than 23,400 megawatts (MW) of coal-fired generation were shut in 2017-2018 versus 14,900 MW in 2009-2012, according to data from Reuters and the U.S. Energy Information Administration (EIA).

Trump has tried to roll back rules on climate change and the environment adopted during the Obama administration to fulfill pledges to voters in states like West Virginia and Wyoming.

But the second highest year for coal shutdowns was in Trump’s second year, 2018, at around 14,500 megawatts, following a peak at about 17,700 megawatts in 2015 under Obama.

One megawatt can power about 1,000 U.S. homes.

The number of U.S. coal plants has continued to decline every year since coal capacity peaked at just over 317,400 MW in 2011, and is expected to keep falling as consumers demand power from cleaner and less expensive sources of energy.

Cheap natural gas and the rising use of renewable power like solar and wind have kept electric prices relatively low for years, making it uneconomic for generators to keep investing in older coal and nuclear plants.

BEIJING (Reuters) – China’s exports unexpectedly fell the most in two years in December, while imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.

Adding to policymakers’ worries, data on Monday also showed China posted its biggest trade surplus with the United States on record in 2018, which could prompt President Donald Trump to turn up the heat on Beijing in their bitter trade dispute.

The dismal December trade readings suggest China’s economy may have cooled faster than expected late in the year, despite a slew of growth-boosting measures in recent months ranging from higher infrastructure spending to tax cuts.

China’s December exports unexpectedly fell 4.4 percent from a year earlier, with demand in most of its major markets weakening. Imports also saw a shock drop, falling 7.6 percent in their biggest decline since July 2016.

“The export growth print also suggests that the recent strength of the yuan might be short-lived; Beijing will perhaps be more eager to strike a trade deal with the U.S.; and that policymakers will need to take more aggressive measures to stabilize GDP growth.”

Asian shares and U.S. stock market futures fell as the surprisingly weak Chinese data added to fears of weaker corporate profits and investment, while the yuan currency gave up some of its early gains.[MKTS/GLOB]

China’s politically-sensitive surplus with the U.S. widened by 17.2 percent to $323.32 billion last year, the highest on record going back to 2006, according to Reuters calculations based on customs data.

As many market watchers predicted, that boost has faded in the last few months. China exports to the U.S. declined 3.5 percent in December while its imports from the U.S. were down 35.8 percent for the month.

China’s total global exports rose 9.9 percent in 2018, its strongest performance in seven years, while imports increased 15.8 percent.

But December’s gloomy data, along with several months of falling factory orders, suggest a further weakening in its exports in the near term.

WASHINGTON (Reuters) – Federal law enforcement agencies that keep Americans safe are starting to feel the strain of the U.S. government shutdown, in its 21st day, with agents working for no pay and investigations delayed, law enforcement officials said.

Training events have been canceled and travel cut back, with President Donald Trump and Congress unable to end the partial shutdown affecting a quarter of the government in a funding standoff over Trump’s proposed U.S.-Mexico border wall.

“We still have a responsibility for going after those who might be using this time to flood the streets” with drugs, a U.S. Drug Enforcement Administration (DEA) field agent told Reuters, asking not to be identified by name.

FBI headquarters “is doing all they can” to ensure major investigations continue, said Tom O’Connor, president of the FBI Agents Association. The group on Thursday sent a petition to the White House and Congress urging them to end the shutdown.

“FBI operations need funding. We’re beginning to raise concerns regarding field operations. Support operations are understaffed,” O’Connor said.

Federal prison workers are also growing frustrated. Prior to the government shutdown, the Bureau of Prisons had to deal with a hiring freeze, followed by 6,000 job cuts.

LONDON (Reuters) – Soothing sounds from the world’s top central banks helped stocks maintain their strong start to the year on Friday, while another leap from China’s yuan capped its best week since being cut loose from the dollar in 2005.

Asia had crawled to a 5-week high overnight thanks to China and Japan, and European stocks were up for what could be the fourth straight day of gains and longest winning streak since September.

“Equities are having a good run after a pretty horrible end to last year,” said Rabobank quantitative analyst Bas Van Geffen.

The index of Europe’s leading 300 shares .FTEU3 was up 0.3 percent in early trade at 1377 points, its highest in almost a month. Germany’s DAX .GDAXI was up 0.1 percent and France’s CAC .FCHI was up 0.2 percent at 4814 points.

The big gainer among Europe’s leading indices was Britain’s FTSE .FTSE, up 0.7 percent at 6992 points on the back of the latest slide in sterling against the euro on mounting Brexit uncertainty.

Wall Street’s strong performance on Thursday was another positive driver. The S&P 500 .SPX is now up more than 10 percent from its Dec. 26 low, and futures point to another rise at the open on Friday.

In the foreign exchange markets, the dollar was on course for its fourth straight weekly fall against other top world currencies having also hit a three-month low the previous day.

The flip side was that the Japanese yen JPY= was a shade higher again at 108.29 per dollar and the euro was up at $1.1530 EUR= on course for its best week since August.

It is China’s yuan that has been the real mover though. Against the backdrop of the sensitive trade negotiations, the Chinese currency has risen 1.8 percent this week which is its biggest gain since July 2005 when Beijing abandoned the yuan’s peg to the dollar.The 10-year U.S. Treasuries yield last stood at 2.728 percent.

Crude prices held near four-week highs, lifted by optimism on U.S.-China talks and as OPEC-led crude output cuts started to tighten supply.

In early European trade West Texas Intermediate crude futures were up 0.9 percent at $53.07 per barrel, the highest level in almost a month. Brent crude futures traded at $62.18 per barrel, up 0.8 percent on the day.

Bloomberg – European shares gained at the open, trailing Asian and U.S. markets. The shadow of Brexit remains, with U.K. politicians resuming the debate on Prime Minister Theresa May’s Brexit deal on Friday.

The Stoxx Europe 600 Index rose 0.2 percent in early trading, with most sectors in the green. Oil is set for its biggest weekly gain in two years. Volkswagen AG’s sales report later on Friday will be closely watched by the market. Elsewhere, Cie Financiere Richemont SA saw its sales growth held back after protests in France and slowing growth in Hong Kong.

The news flow remains mainly negative, but quite a bit of this has already been priced in, said Lippo Suominen, chief strategist at Finnish asset manager FIM. “Investors are worried but don’t dare to short equities as there is a clear risk of positive short-term market moving announcements.”

“Next all eyes will turn to the fourth quarter earnings season that kicks off in the U.S. next week,” Suominen said. “Earnings growth is slowing clearly from past quarters but investors want to hear what companies are saying on the outlook for the coming year. Very cautious comments are expected that will keep the markets shaky also going forward.”

WASHINGTON (Reuters) – President Donald Trump, facing the prospect within days of the longest U.S. government shutdown in history, was considering declaring a national emergency that would likely escalate a policy dispute with Democrats over his proposed U.S.-Mexico border wall into a court test of presidential power.

To escape a political trap of his own making, Trump suggested strongly on Thursday that he might declare an emergency so that he can bypass Congress to get funding for his wall, which was a central promise of his 2016 election campaign.

The partial federal government shutdown entered its 21st day on Friday. It will become the longest shutdown ever on Saturday.

The Wall Street Journal, NBC and the Washington Post, citing unnamed sources, reported that the White House had asked the U.S. Army Corps of Engineers to look into diverting money from its budget toward the wall and to explore how fast construction could begin under an emergency declaration. Reuters could not immediately verify the accuracy of the reports.

LONDON (Reuters) – The British government will accept a demand by parliament to set out its plan B within days if Prime Minister Theresa May’s deal is rejected next week, Andrea Leadsom, the Leader of the House of Commons said on Thursday.

On Wednesday, parliament voted for an amendment calling on the government to set out its plan B within three working parliamentary days of the Jan. 15 vote, rather than the 21 days specified in Brexit law.

Asked by a lawmaker whether the government would accept that timetable, Leadsom said: “Of course the government will do so, the prime minister has shown her willingness to always return to this House at the first possible opportunity if there is anything to report in terms of our Brexit deal and we will continue to do so.”

Parliament is not due to sit on Jan. 18, so three working days will be Jan. 21.

BEIJING (Reuters) – China and the United States made progress during their recent trade talks over structural issues such as forced technology transfers and intellectual property rights, China’s commerce ministry said on Thursday.

This week’s talks were lengthy because both sides were serious and honest, the ministry’s spokesman Gao Feng told reporters.