Concern on euro zone debt recovery drags indexes lower for second day

FTSE: 5,410.35 (-26.35) Mid-250: 10,178.89 (-14.73) Small Cap: 2,801.03 (-31.70)UK STOCKS declined for a second day after data showed China's economy grew at the slowest pace in two years, adding to concern that Europe's debt crisis is dragging on the global recovery.

Rio Tinto and Vedanta Resources lost at least 3.5 per cent as copper retreated in London. Standard Chartered dropped 2.7 per cent after Singapore’s Temasek Holdings sold $650 million of exchangeable bonds.

Stocks fell after Germany dashed investor optimism on a quick resolution to the region’s debt crisis when they meet at a summit in Brussels this weekend.

The FTSE 100 had risen for three straight weeks amid optimism that policy makers will find a solution to the crisis that has Greece on the edge of a default.

Commodity producers declined after the economy in China, the world’s biggest consumer of the copper, expanded in the third quarter at the slowest pace since 2009. Three-month copper on the London Metal Exchange plunged as much as 3.7 per cent to $7,215 a metric tonne.

Rio Tinto dropped 4.3 per cent to 3,159.5 pence and Vedanta slipped 3.5 per cent to 1,164p.

BHP Billiton fell 0.8 per cent to 1,894p and Xstrata, which reported a 4 per cent drop in copper output for the third quarter, lost 1.3 per cent to 936.5p. BHP and Rio also fell after China’s Economic Information Daily reported that Vale had decided to cut iron ore prices to $160 a tonne from $175 a tonne, according to an unidentified official from a Chinese steelmaker. Rio and BHP may respond “soon” to similar requests, the newspaper said.

Standard Chartered dropped 2.7 per cent to 1,390p after Temasek sold $650 million of bonds maturing in 2014 that are exchangeable into the UK lender’s shares.

William Hill dropped 5.3 per cent to 228.8p after analysts downgraded the UK bookmaker. Deutsche Bank lowered its recommendation to “hold”, while Numis Securities cut its rating to “reduce”.

G4S was up 9.8 per cent to 241.5p. The shares had slumped 22 per cent on Monday after the company announced a £2 billion rights offer to help acquire ISS.

BSkyB climbed 1.6 per cent to 675.5p before the UK’s biggest pay-TV operator reports earnings today. Homebuilder Bellway rose 3.1 per cent to 698.5p after reporting a 51 per cent jump in annual profit to £50.1 million, beating the average analyst estimate of £48.3 million. – (Bloomberg)