Global growth worries send the FTSE down

LONDON REPORT

BRITAIN’S top shares fell yesterday on concern about prospects for global growth, with a murky outlook for metal demand from top consumer China shunting miners to the top of the fallers’ list.

The FTSE 100 closed down 32.97 points, or 0.5 per cent, at 6,345.63, albeit still within sight of a five-year peak of 6,412.44 struck on 20 February, with the mining sector off 2.6 per cent and trading around three-month lows.

Sentiment in the mining sector, already dented on Friday by poor Chinese manufacturing data, was exacerbated by worries over Beijing tightening its grip on the property sector, a move that could stunt the country’s demand for raw materials.

Kazakhmys led the market lower, continuing a slide seen since Thursday when it warned of sharply higher costs.

Its shares sank 5.9 per cent as Deutsche Bank became the latest investment bank to weigh in on the copper miner, cutting its target price to 65p.

Anglo American, meanwhile, shed 2.7 per cent as Nomura cut its rating on the firm to “reduce”.

Banks suffered too, with heavyweight HSBC off 2.5 per cent, alone accounting for 13.1 points of the FTSE 100’s drop, after it analyst expectations with its 2012 results.

Also hurting broad market sentiment were concerns about US budget cuts – known as the sequester – which threaten to curb growth in the world’s biggest economy, and over political instability following Italian elections, which has fuelled fears of a return of the Eurozone debt crisis.

Having jumped some 22 per cent over the nine months to its February peak, boosted by the European Central Bank’s promise to defend the euro, the UK benchmark has been stuck in consolidation mode, trading within a 200-point range.

“I think you’ve got to stick with it, ride it out, and wait for the good times to return, as it were,” said Peter Dixon, economist at Commerzbank.

“I think primarily what we’re looking for here is a recovery in confidence, and once you start to see some small [improvements] coming through, in the UK and elsewhere, you might start to see a bit more impetus back in equity markets.”

Retailer Next was another significant faller, off 2.5 per cent, on a read-across from mid-cap peer Debenhams which delivered a first-half profit warning yesterday, sending its shares 14.7 per cent lower.

Traders also cited a UBS downgrade to “neutral” on Next as a catalyst for its share price weakness.

Defensive stocks such as drug company Shire, which rose 0.8 per cent, limited the FTSE 100’s decline.