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Slide in mining stocks pulls FTSE lower

Published 08/12/2015, 11:37
© Reuters. People walk through the lobby of the London Stock Exchange in London
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By Sudip Kar-Gupta

LONDON (Reuters) - A fall in major mining stocks such as Anglo American (L:AAL) weighed down on Britain's top share index, which looked set for a fourth consecutive day of losses on Tuesday.

The blue-chip FTSE 100 index (FTSE) was down by 0.7 percent at 6,182.77 points in midday trading, with the FTSE 350 Mining index (FTNMX1770) down 5.5 percent and headed for its biggest one-day fall since September.

British mining stocks have fallen around 50 percent so far in 2015, due to concerns about a slowdown in China, the world's biggest consumer of metals.

Data on Tuesday showed that China's imports fell for the 13th consecutive month with an 8.7 percent decline in November compared to a year earlier, exacerbating concerns about the broader economic outlook for the Asian giant.

Anglo American shares also slumped to a record low after the company suspended dividends for the second half of this year.

"The miners will probably continue to weaken while the Chinese economic outlook remains a concern," said Beaufort Securities sales trader Basil Petrides.

Packaging and paper company Mondi (L:MNDI) also fell 5.4 percent, which traders attributed to a downgrade on the stock from Bank of America (N:BAC) Merrill Lynch.

After sharp falls this year due to loss of market share to discount rivals Aldi and Lidl, supermarket stocks such as Sainsbury (L:SBRY) and Tesco (L:TSCO) rose.

Dealers attributed the gains to investors buying the beaten-down stocks before the traditionally busy Christmas shopping period.

Analysts at Bernstein wrote in a research note that Sainsbury and Tesco had managed to protect some of their prices, which also gave a lift to those stocks.

The FTSE 100 hit a record high of 7,122.74 points in April but has since lost ground, due to concerns over China and the impact of a possible U.S interest rate rise in December.

© Reuters. People walk through the lobby of the London Stock Exchange in London

The index is currently down 6 percent so far in 2015.

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