Sell-off triggered by eurozone fears

MINING stocks bore the brunt of a sell-off yesterday as fears over the eurozone's debt lingered.

The FTSE 100 index tested the 5,000 barrier at one stage before bouncing back but still closed 84.95 points lower at 5,073.13.

The fall added a further 1.7 per cent slide to Wednesday's 2.8 per cent plunge in the wake of Germany's surprise move to ban speculators from betting against the eurozone.

Figures showing a sharp fall in consumer confidence in the eurozone as well as disappointing US jobs data added to the negative mood as Wall Street's Dow Jones Industrial Average fell more than 2 per cent after the opening bell rang.

Germany's DAX and France's CAC were off 2 per cent and 2.7 per cent respectively, while the euro fell back below $1.24 after an attempted rally earlier.

City Index market strategist Joshua Raymond said: "The markets are a whole mess of uncertainty and fear right now."

Peter Dixon, economist at Commerzbank, added: "Investor uncertainty is leading to a flight to quality and safe havens.

"Dumping stocks seems sensible with so much uncertainty on the macro environment, and all fundamental ways of looking at value are out of the window."

The pound was also under pressure on currency markets, sinking to $1.43 and falling beneath 1.16 against the single currency.

Gains among banks and oil stocks initially limited the damage, but the wide-ranging sell-off left all but a handful of firms in the red.

Power provider National Grid was the Footsie's biggest casualty after it revealed plans to tap shareholders for 3.2 billion to speed up investment in its ageing infrastructure. Shares in the energy firm sunk 7 per cent, or 43.5p, to 576.5p, despite news of a 12 per cent rise in underlying full-year profits.

SAB Miller – the world's second-largest brewer and maker of Grolsch and Pilsner Urquell – was down 123p at 1,910p after cautious comments on consumer spending overshadowed full-year results.

They were followed by a raft of mining stocks, led by Eurasian Natural Resources, which shed 58.5p to 934.5p.

Worries over a European slowdown and moves to cool the Chinese economy prompted a downgrade for UK miners from brokers at BoA/Merrill Lynch.

Rio Tinto and Xstrata – which were both cut by the broker to "neutral" from "buy" – fell 5.8 per cent to 2,812p and 4.3 per cent to 893.2p respectively.

Kazakhmys and Vedanta – which Merrill Lynch double downgraded – fell 4.3 per cent to 1,089p and 3.7 per cent to 2,119p respectively.

British Airways began the day ahead but lost 3 per cent, or 6.2p, to 186.5p after trade union Unite won its appeal against a High Court injunction in London banning the latest strikes. Industrial action by cabin crew is now likely to start on Monday.

In the second tier, Mothercare was down 4 per cent, or 22p, at 525p as the babycare retailer lost ground on its cautious outlook for the UK market despite better international prospects.

But cash and carry firm Booker was on the rise, up 3 per cent, or 1.15p, to 40.35p, after reporting a 21 per cent rise in full-year profits.