FTSE 100 treads water as China stats hit miners

BRITAIN’S benchmark share index edged lower yesterday, with weakness in miners on the back of soft Chinese data only partly offset by demand for healthcare and travel shares cheapened by a recent sell-off.

Industrial metals and miners were hit by a run of softer-than-expected Chinese data at the weekend which raised the prospect of lower second-quarter economic growth in the world’s top metals consumer.

Evraz and Polymetal, down 2.3 and 4.7 per cent, were among the worst hit, also hurt by possible demotion from the FTSE 100 this week.

The Chinese numbers capped upward momentum from late last week, when weaker US jobs data calmed investor concerns about a possible early easing of central bank stimulus, credited as a key driver of global equity market gains over the past year.

“There are some crucial sectors – resources are the most obvious, but anything that is relies on sales to China – that are coming under a bit of pressure,” said Andrew Morris, key account director at Rowan Dartington Signature.

However, he added that the recent market weakness had potentially increased the attractiveness of other sectors: “This selectively looks like a decent entry point, we would be cautiously optimistic about this point.”

With such buying-on-the-dip in sectors like healthcare partly balancing the weakness in miners, the FTSE 100 closed down 0.2 per cent, or 11.54 points at 6,400.45, after finding tough resistance at the 100-day moving average.

Technical analysts, though, said that the current correction – which has seen the FTSE drop nearly seven per cent from a 13-year high hit on 22 May – was likely to be followed by more gains.

“The two and a half week correction has certainly been deeper than anticipated, but the long-term uptrend remains intact while strong support at 6,214.36 holds,” said Ed Blake, technical analyst at Informa Global Markets.

Budget airline EasyJet was one of the top gainers, after a steep drop last week. It rose 2.7 per cent, taking comfort from lower oil prices, a boon for fuel consumers which analysts say the market has yet to price in.

ITV was the biggest riser, up 3.7 per cent after upbeat analyst coverage.

Meanwhile shares in water group Severn Trent fell six per cent after a group of bidders threatened to walk away unless the board engages.