China worries weigh on Footsie

China worries weigh on Footsie

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The FTSE 100 Index dropped 87 points to 5890.4

Mining stocks have weighed the FTSE 100 Index down amid fears that further Chinese monetary tightening will choke demand.

The FTSE 100 Index dropped 87 points to 5890.4 after similar losses in Asia as the Nikkei 225 and the Hang Seng Index both dropped by more than 1%.

China’s economy expanded 9.8% in the fourth quarter while inflation in December moderated to 4.6% from November’s 28-month high, but analysts said it was still more than expected and likely to rise again. This led to fears China will have to slow economic growth, which could dent the country’s appetite for crude and other commodities.

Mining stocks suffered, with silver miner Fresnillo dropping 66p to 1364p, copper firm Kazakhmys off 66p at 1556p and coal, copper and nickel giant Xstrata losing 53.5p at 1409p.

Energy stocks were also weak as the price of crude oil fell, with BP down more than 2%, or 11.3p, at 494.8p, Tullow Oil off 33p at 1327p and Cairn Energy down 10.9p at 435.7p.

British Airways was down more than 3% on its last day of stock market trading before its merger with Spanish carrier Iberia.

The merger will be completed on Friday and shares in the new holding company, International Consolidated Airlines Group (IAG), will be listed in London and Madrid on Monday.

Shares shed 10.3p to 277.2p as investors also reacted to a warning from easyJet that its half-year losses could double due to the impact of weather disruption and the rising cost of fuel. The stock fell 13%, or 61.8p, to 394p after the budget carrier revealed the snow chaos cost it £18 million.

More Than insurer RSA was another casualty of the recent snow after it revealed its bill for UK weather-related claims was expected to be £110 million more than normal after the coldest December for 100 years.

RSA said full-year earnings would be lower than market forecasts – at around £600 million to £630 million against predictions for at least £700 million. Shares fell 1.2p to 133.7p.

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