Footsie retreats with mining stocks hit as China reduces metal imports

FTSE: 5,845.29 (–92.01) Mid 250: 11,515.64 (–214.56) Small Cap: 3,230.77 (–37.09)RESOURCE STOCKS took a heavy toll in London yesterday after Chinese trade data raised the prospect of slowing demand for base metals.

Meanwhile, continuing fears about unrest in Libya spreading to other countries in the region on top of intensifying worries over European sovereign debt issues ensured the sell-off intensified in afternoon trade.

China’s imports of iron ore and copper were relatively weak in February, with copper imports falling by one-third in February from January’s levels, in part reflecting the impact of the country’s Lunar New Year holiday. Overall, the fast-growing economy reported a trade deficit of $7.3 billion last month, its lowest level since March 2010.

Heavily weighted miners crowded on to the list of falling shares on the FTSE 100, with Fresnillo down 4.8 per cent at £15.13, and ENRC off 3.8 per cent to 902½p.

“Confidence in equity markets is being shaken once again as China’s surprise posting of a trade deficit combined with the ongoing geopolitical uncertainty – something that’s still focused very much on Libya – is pushing traders very much into a bearish mindset,” said Harley Salt, head of sales trading at IG Markets.

There were sharp losses for Home Retail, owner of the Argos outlets, after it warned that annual profit would be in a £250 million to £255 million range after recent trading had been more difficult than expected. Shares in the mid-cap company, which also owns the Homebase home improvement outlets, fell 5.9 per cent to 198.5p.

Back on the top tier, there was a better reaction to news of a 0.9 per cent rise in like-for-like annual sales as grocer Wm Morrison, which pledged “a three-year commitment to double-digit annual dividend growth”. The stock added 1.6 per cent to 285p.

Aggreko fell 6.7 per cent to £13.90 after it said it did not expect its trading profit to grow in 2011, due to fewer major sporting events at which its temporary power generators are popular.

There was little reaction to confirmation the Bank of England left interest rates on hold at historic lows, with investors more interested in the release of the minutes of the discussion in two week’s time for insight into the three-way split on the committee. – (Copyright The Financial Times Limited 2011)