Poor Chinese figures spook traders

MINING stocks dragged the Footsie down yesterday after China’s weakest economic growth figures for two years raised question marks over demand for metals and minerals.

The FTSE 100 index hit a low of 5,348.64 earlier in the session, but rallied to close down just 26.35 points at 5,410.35 as market volatility continued in thin trading on both sides of the Atlantic.

Investor confidence was further hampered by US investment bank Goldman Sachs reporting only its second quarterly loss as a public company, blaming difficult market conditions and a lack of confidence among investors and corporate clients.

Will Hedden, a sales trader at IG Index, said: “Those ‘worrying’ Chinese growth numbers are spooking the miners, which could be something of an overreaction as 9.1 per cent gross domestic product growth is hardly something to be sniffed at while the developing world is struggling to hold its head above the water.”

Banking stocks came under pressure after credit rating agency Moody’s warned France that it may place it on “negative outlook” over the next three months and it could lose its prized triple-A credit status if the cost of a eurozone bail-out and recapitalisation of the banks overstretches its budget.

Asia-focused bank Standard Chartered was among the worst hit financial stocks, down 2.8 per cent, or 39p, to 1,390p. Traders said it was not helped by uncertainty after Singaporean state investor Temasek launched a bond exchangeable into the London-listed bank’s shares.

Royal Bank of Scotland was down 0.33p at 23.74p, while Lloyds Banking Group was 0.36p lower at 32.06p.

Miners dominated the fallers board, with Rio Tinto down 4.3 per cent, or 142.5p, to 3,159.5p and Vedanta Resources losing 42p, or 3.5 per cent, to 1,164p.

Tullow Oil rose 2.6 per cent, or 35p, to 1,410p as traders await a drilling update, while Aberdeen-based explorer Faroe jumped 6.9 per cent, or 10p, to 154p after striking oil in Norwegian waters.

Bargain hunters picked up G4S, which bounced 9.8 per cent, or 21.6p, to close at 241.5p, having slumped more than 20 per cent on Monday when announcing a deeply discounted rights issue to pay for its £1.5 billion acquisition of Danish firm ISS.

A host of Scottish stocks were on the front foot following broker notes and a dividend hike.

Shares in Dunfermline-based eye scanner maker Optos were in sharp focus after Investec Securities began covering the firm with a “hold” rating and noted management is “doing the right things”. Optos closed up 4.2 per cent, or 7.75p, at 191p.

Over at Shore Capital, analysts began coverage of Duns-based Produce Investments, the owner of potato producer Greenvale, which supplies tatties to Tesco. Produce’s shares edged up 0.5p at 157p after Shore highlighted its “attractive entry metrics”.

Plexus, which makes well heads for the oil and gas industry and has its main operations base in Aberdeen, posted a 144 per cent rise in pre-tax profits to £1.6 million in the year to 30 June after selling more high-pressure rather than low-pressure equipment. The firm proposed raising its final dividend by 10 per cent to 0.43p, sending shares up 3p, or 4.4 per cent, to 71p.