London close: Copper-price fall hammers miners as FTSE 100 drops 2.4%

A plunge in the price of copper and a tumble across the heavyweight mining sector resulted in a sharp sell-off in London on Wednesday, as investors showed concerns about the global economic outlook.

"It has turned into a very ugly day for the London market, as a confluence of bad news provided the spark for heavy selling across the board," said analyst Chris Beauchamp from IG.

The FTSE 100 finished the session down 2.4% at 6,388.

Beauchamp said there was "carnage" in the UK mining sector as risk appetite was scaled back following a growth forecast downgrade at the World Bank, weak US retail sales data and underwhelming results from US banking group JPMorgan Chase & Co.

Copper prices slumped nearly 6% to a low of $5.353.25 a metric tonnes, falling to its lowest since mid-2009, after the World Bank slashed its growth forecasts for the global economy for this year to 3% from 3.4% previously. Next year's estimates were also lowered with "risks to the outlook remain tilted to the downside".

Meanwhile, although the recent slide in oil prices eased, Brent crude still fell 0.5% at $46.34 a barrel after US government data showed that oil stockpiles Stateside increased to a six-month high last week.

Despite the sell-off across equity markets across Europe, hopes for quantitative easing (QE) in the Eurozone were boosted ahead of the European Central Bank’s (ECB) policy meeting next week after ECB president Mario Draghi was quoted as saying that he is ready to buy government bonds. In an interview with German newspaper Die Zeit, Draghi said that loose monetary policy is needed to achieve price stability in the Eurozone.

A leading lawyer at the European Court of Justice claimed that outright monetary transactions were compatible with EU law as long as certain conditions are met, which some economists said effectively gave the green light to full-blown QE by the ECB.

Mining stocks tumble across the board

Mining stocks dropped sharply on Wednesday, though those with copper operations suffered the worst, such as Glencore, Anglo American, BHP Billiton, Antofagasta, Kaz Minerals and Vedanta Resources. Glencore, in particular, fell over 9% to a record-low.

Oil and gas stocks were also in the red, such as BP, Shell, BG Group, Afren and Tullow Oil.

Nevertheless, the standout faller of the day was Game Digital which dropped over 30% after delivering a profit warning. The video-games and console retailer said that full-year profits would be “broadly in line” with last year after a “highly competitive” Christmas.

Tesco was one of the few risers on the FTSE 100 after activist investor Bill Ackman reportedly said that he had considered buying a stake in the firm. Investors were shrugging off the news that S&P has followed in the footsteps of fellow ratings agency Moody's by cutting its rating on the supermarket's debt to 'junk'.

Burberry was slightly lower despite saying that reported retail sales growth accelerated strongly in the third quarter, though it highlighted a slowdown in the high-margin market of Hong Kong. The high-end luxury fashion group said retail revenues totalled £604m in the three months to 31 December, up 14% on last year.

Fashion retailer Supergroup surged after strong Christmas trading performance underpinned its full-year profit guidance. Like-for-like sales grew by 12.4% in the 11 weeks to 10 January.

Market Movers
techMARK 2,959.33 -1.14%
FTSE 100 6,388.46 -2.35%
FTSE 250 15,872.09 -1.32%

FTSE 100 - Risers
Royal Mail (RMG) 434.30p +1.47%
Tesco (TSCO) 214.00p +0.94%
Hammerson (HMSO) 631.00p +0.64%
BT Group (BT.A) 401.40p +0.40%
Aviva (AV.) 491.40p +0.12%

FTSE 100 - Fallers
Glencore (GLEN) 244.00p -9.28%
Anglo American (AAL) 1,042.50p -8.99%
Coca-Cola HBC AG (CDI) (CCH) 1,069.00p -6.06%
BHP Billiton (BLT) 1,285.00p -5.31%
Intertek Group (ITRK) 2,244.00p -5.04%
Weir Group (WEIR) 1,608.00p -4.96%
Standard Chartered (STAN) 886.10p -4.88%
Antofagasta (ANTO) 675.00p -4.80%
Ashtead Group (AHT) 1,033.00p -4.70%
Hargreaves Lansdown (HL.) 914.50p -4.54%

FTSE 250 - Risers
Supergroup (SGP) 896.00p +10.41%
IP Group (IPO) 227.00p +4.22%
Elementis (ELM) 287.50p +3.83%
Saga (SAGA) 160.90p +3.81%
Just Eat (JE.) 340.80p +3.43%
Dignity (DTY) 1,850.00p +3.41%
Big Yellow Group (BYG) 618.50p +2.74%
Nostrum Oil & Gas (NOG) 441.40p +2.65%
Allied Minds (ALM) 380.00p +1.88%
Debenhams (DEB) 71.30p +1.86%

FTSE 250 - Fallers
Game Digital (GMD) 242.00p -30.46%
Kaz Minerals (KAZ) 170.40p -26.07%
Afren (AFR) 21.74p -16.03%
Vedanta Resources (VED) 408.20p -15.90%
Infinis Energy (INFI) 188.40p -8.85%
Entertainment One Limited (ETO) 279.00p -6.12%
Grainger (GRI) 184.00p -5.40%
Vesuvius (VSVS) 430.30p -5.26%
BlackRock World Mining Trust (BRWM) 298.20p -5.18%
Polymetal International (POLY) 539.50p -4.85%