London close: Stocks decline on mining slump

Mining shares declined on Tuesday, dragging UK equities lower at close of trading.

The FTSE 100 ended down 1.42% to 6,135 points, led by Anglo American and Rio Tinto.

Anglo American's shares tumbled after saying it will suspend its dividend to investors this year and the next as it announced a "radical" portfolio restructuring and further material costs savings and capex reductions to combat declining commodity prices.

Rio Tinto was in the red as the miner said 2016 group capital expenditure will be $1bn (£660m) less than forecast at $5bn (£3.3bn) as its cost cutting regime continues.

Fellow miners BHP Billiton, Antofagasta, Glencore and Randgold Resources were also sitting lower on the FTSE as Chinese trade data added to concerns about the slowdown in the world’s second largest economy.

Chinese exports dropped 6.8% in November compared to a year ago, marking the fifth consecutive month of decline. Analysts had predicted a 5% fall.

Imports decreased 8.7% in November, worse than the 11.8% drop expected.

The trade balance narrowed to $54.10bn from $61.64, missing estimates of $64.15bn.

On a brighter note for the market, oil stocks rebounded in afternoon trade with BP and Royal Dutch Shell sitting higher, as crude prices rose. Brent crude rose 0.6% to $40.98 per barrel while West Texas Intermediate increased 1.2% to $38.12 per barrel at 1632 GMT.

The sector suffered steep losses on Monday after Brent and WTI reached a six-year and a near seven-year low, respectively. The decline came amid concerns about an oversupply in the market after OPEC decided to keep production unchanged on Friday.

Eurozone GDP

The Eurozone economy expanded in line with expectations in the third quarter, bolstered by private consumption and government spending, Eurostat revealed.

Gross domestic product in the 19-country bloc grew 0.3% quarter-on-quarter in the three months to September, down from 0.4% the previous quarter. On a year-on-year basis, GDP grew 1.6%, in line with the previous quarter’s reading and with consensus.

“Growth is likely to pick up again in the first quarter, however, to around 0.4% on our estimates before edging up to 0.4-0.5% in the second half of 2016,” said Clemente De Lucia, Eurozone economist at BNP Paribas.

“We expect growth to average 1.5% in 2016 as a whole – an above-trend but unspectacular pace. “

UK data

The UK economy grew 0.6% in the three months to November, according to the National Institute of Economic and Social Research. The estimate on gross domestic product was unchanged from last month’s forecast for growth in the three months to October.

NIESR said the pace of growth puts the Bank of England on the path to raising interest rates in February. The BoE is expected to leave policy unchanged on Thursday.

Meanwhile, UK manufacturing production slid 0.4% month-on-month in October, compared with an upwardly revised 0.9% gain in September and with analysts’ expectations for a 0.2% decline, according to the Office for National Statistics.

Industrial production climbed 0.1% month-on-month in October compared with stagnant growth in the previous month and in line with analysts’ expectations.

Halifax reported a 0.2% decline in UK house prices in November, compared to analysts’ expectations for a 0.2% increase and the previous month’s 1% rise.

Supermarkets rally

Supermarkets gained including J Sainsbury, Tesco and Morrison after a positive note from Bernstein. The broker said that where discount retailer Aldi isn't able to maintain price leadership , instead of running loss leaders, it is likely to reduce its branded range. “This is good news for the big-four for two reasons: firstly it demonstrates that Aldi will not cut prices forever and secondly it improves one of their major competitive advantages – you can get the brands you love.”

Berkeley Group Holdings jumped as Credit Suisse increased its target price from 2,814p to 3,101p after the company boosted its capital return programme, unveiled an increase in forward sales and management expressed confidence in the operating environment.

Entertainment One plunged after Peel Hunt downgraded the stock to ‘reduce’ from ‘hold’ and slashed the price target to 200p from 260p.

Animal genetics company Genus was a high riser after saying it has developed the first pigs resistant to porcine reproductive and respiratory syndrome virus (PRRSv), though a long-standing collaboration with the University of Missouri.

Market Movers

FTSE 100 (UKX) 6,135.22 -1.42%
FTSE 250 (MCX) 17,204.34 -0.87%
techMARK (TASX) 3,184.70 -0.97%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 245.00p 1.37%
BP (BP.) 347.80p 0.06%
Berkeley Group Holdings (The) (BKG) 3,600.00p 0.00%
Royal Dutch Shell 'B' (RDSB) 1,526.00p -0.03%
Royal Dutch Shell 'A' (RDSA) 1,517.50p -0.07%
SABMiller (SAB) 4,020.00p -0.25%
Inmarsat (ISAT) 1,120.00p -0.27%
Tesco (TSCO) 156.55p -0.29%
National Grid (NG.) 910.00p -0.32%
Intu Properties (INTU) 312.00p -0.38%

FTSE 100 - Fallers

Anglo American (AAL) 323.65p -12.29%
Rio Tinto (RIO) 1,893.00p -8.37%
Mondi (MNDI) 1,376.00p -7.59%
Antofagasta (ANTO) 441.70p -7.57%
Glencore (GLEN) 79.82p -6.49%
BHP Billiton (BLT) 722.80p -5.54%
Randgold Resources Ltd. (RRS) 4,061.00p -3.70%
Rolls-Royce Holdings (RR.) 590.00p -3.36%
Fresnillo (FRES) 668.50p -3.19%
Royal Bank of Scotland Group (RBS) 291.10p -2.80%

FTSE 250 - Risers

Lancashire Holdings Limited (LRE) 615.50p 6.21%
CLS Holdings (CLI) 1,845.00p 5.91%
Allied Minds (ALM) 469.00p 2.40%
Croda International (CRDA) 2,974.00p 2.27%
Clarkson (CKN) 2,460.00p 1.78%
Spire Healthcare Group (SPI) 310.20p 1.64%
Genus (GNS) 1,489.00p 1.64%
Telecom Plus (TEP) 1,078.00p 1.13%
Nostrum Oil & Gas (NOG) 379.60p 1.09%
Hellermanntyton Group (HTY) 479.00p 0.88%

FTSE 250 - Fallers

Entertainment One Limited (ETO) 140.90p -20.12%
Jimmy Choo (CHOO) 117.00p -6.02%
Petra Diamonds Ltd.(DI) (PDL) 61.10p -5.78%
Serco Group (SRP) 103.30p -5.49%
Ocado Group (OCDO) 352.60p -5.09%
AO World (AO.) 162.80p -4.18%
Home Retail Group (HOME) 105.80p -4.17%
Drax Group (DRX) 218.70p -3.91%
Crest Nicholson Holdings (CRST) 537.00p -3.76%
Poundland Group (PLND) 214.20p -3.73%