Mining stocks drag FTSE into red
Mining stocks weighed the FTSE 100 Index down today amid fears that further Chinese monetary tightening will choke demand.
The FTSE 100 Index dropped 87 points to 5890.4 after similar losses in Asia as the Nikkei 225 and the Hang Seng Index both dropped by more than 1%.
China’s economy expanded 9.8% in the fourth quarter, while inflation in December moderated to 4.6% from November’s 28-month high but analysts said it was still more than expected and likely to rise again.
This led to fears China will have to slow economic growth, which could dent the country’s appetite for crude and other commodities.
Mining stocks suffered with silver miner Fresnillo dropping 66p to 1364p, copper firm Kazakhmys off 66p at 1556p and coal, copper and nickel giant Xstrata losing 53.5p at 1409p.
Energy stocks were also weak, as the price of crude oil fell, with BP down more than 2% or 11.3p at 494.8p and Tullow Oil off 33p at 1327p and Cairn Energy down 10.9p at 435.7p.
British Airways was down more than 3% on its last day of stock market trading before its merger with Spanish carrier Iberia.
The merger will complete tomorrow and shares in the new holding company, International Consolidated Airlines Group (IAG), will be listed on stockmarket in London and Madrid on Monday morning.
Shares shed 10.3p to 277.2p as investors also reacted to a warning from easyJet that its half-year losses could double due to the impact of weather disruption and the rising cost of fuel.
The stock fell 13% or 61.8p to 394p after the budget carrier revealed the snow chaos cost it £18m (€21.3m).
In other corporate news, More Than insurer RSA was another casualty of the recent snow after it revealed its bill for UK weather-related claims was expected to be £110m (€130.2m) more than normal after the coldest December for 100 years.
RSA said full-year earnings would be lower than market forecasts – at around £600m (€710.6m) to £630m (€746.1m) against predictions for at least £700m (€829.1m). Shares fell 1.2p to 133.7p.
Primark owner Associated British Foods saw shares drop 36p to 1079p after it warned the retailer’s profits would be squeezed by the rise in cotton prices.
AB Foods also warned the recent weather conditions had impaired the quality of its sugar beet crop in the UK, which could reduce profits at its sugar division.
Financial stocks featured on a shortened risers’ board, with Barclays up 2.4p at 298.5p and Lloyds ahead 0.8p at 67p, despite sentiment in the sector being shaken by Goldman Sachs’ disappointing fourth quarter results released yesterday.
