Markets: Miners slide amid fears over China

MINING stocks took a pummelling yesterday amid concerns about the Chinese economy, sending the Footsie sliding back down towards the 6,000-mark.

The FTSE 100 Index fell 21.81 points, or almost 0.4 per cent, to close at 6,002.07. The index dropped as low as 5,948.47 at one stage before rallying in the afternoon.

China moved to fight inflation by raising the reserve requirements for the country's biggest lenders, leading to fears that the country's stellar economic growth may slow.

This caused metal prices to tumble, and with them the market value of miners.

The three biggest fallers in the Footsie were all mining stocks, with Fresnillo down 4.2 per cent to 1,492p, Anglo American off 3.2 per cent at 3,300p and Antofagasta behind 2.4 per cent at 1,502p.

Michael Hewson, market analyst at CMC Markets, said: "If investors were hoping that chip maker Intel's record quarterly results would prompt further buying they were mistaken.

"China raised the reserve requirements on bank reserves by 50 basis points, which prompted a further sell-off in commodity stocks with the mining sector leading the decliners."

Slipping oil prices also affected the top tier, with BP shedding 4.2p at 499.5p, Shell off 12.5p at 2,107.5p and Cairn Energy down 1.4p at 453.3p.

But microchip maker Arm Holdings continued to benefit from strong Intel sales figures, topping the Footsie risers board with shares up 5.3 per cent to 530.5p.

It was a quieter session for corporate news as the recent run of Christmas trading updates from retailers came to an end, but outside the FTSE 100 several smaller caps reported on recent trading.

Fashion chain Ted Baker saw shares drop more than 1 per cent after the retailer reported a slowdown in group sales growth as UK trading was hit by the extreme weather in the run-up to Christmas.

The British designer brand reported a 7.6 per cent rise in group retail sales for the eight weeks to 8 January, compared with 8.6 per cent in the third quarter to 13 November. Shares were down 8p at 660p.

Bovis Homes sparked share gains for the housebuilding sector after it said 2010 profits were expected to beat market forecasts. The group reported that average selling prices rose 4 per cent last year and announced it will restart dividend payments for the first time since mid-2008.

Bovis shares rose nearly 3 per cent or 12p to 437.2p, helping rivals move higher.Rival Taylor Wimpey added 0.7p to 33.9p and Redrow gained 2.7p to 130.1p.

Car dealership Lookers - which owns the Taggarts chain of showrooms north of the Border - saw shares climb nearly 4 per cent, up 2.3p to 64.3p, after the group said it will deliver results at the top end of analysts forecasts after its recent strong run continued through the fourth quarter.

But a profit warning from building services group T Clarke sent shares plunging by 18 per cent, down 23p to 102p

The company reported that its markets remained under pressure following the recession, with woes compounded by last month's snow.