London close: Stocks led lower by mining shares as commodity prices drag

The FTSE 100 was dragged lower by a slump in mining stocks following weak Chinese data and broadly bearish sentiment in the commodities market.

Glencore and Anglo American were the top fallers after Investec said the challenging environment for the sector calls into question the equity value of the mining companies. The note from the brokerage came as Glencore agreed to sell its Araguaia nickel project to Horizonte Minerals for a discount price of $8m.

Other miners, including BHP Billiton and Rio Tinto, also declined as commodity prices dropped and a report showed an 8.8% decrease in Chinese industrial profits in August, adding to concerns about the nation’s slowdown.

“None of the major mining companies could avoid the chaos of the panic selling, and it will be a long time before confidence is restored,” said IG’s market analyst David Madden.

Elsewhere in Asia, Bank of Japan governor Haruhiko Kuroda said inflation would not reach 2% without further improvement in wages, employment and prices.

In European news, pro-independence parties in Spain's Catalonia region won an absolute majority in regional elections but they fell just short of getting 50% of the vote, winning 1.9m out of 4m ballots cast. Spain’s central government in Madrid said it would challenge the move towards independence but the pro-independence parties are expected to form a coalition.

US data, interest rates

Personal spending in the US rose 0.4% in August from a month earlier, the Commerce Department revealed, beating forecast of 0.3% growth. Personal incomes climbed 0.3% in August, worse than the 0.4% rise expected.

“Admittedly, the more modest 0.3% month-on-month increase in personal income last month is a little discouraging at first glance,” said Paul Ashworth, chief US economist at Capital Economics.

“But there are few signs of weakness linked to the labour market. Wages and salaries increased by a strong 0.5% month-on-month in August, following an even bigger 0.6% month-on-month rise in July.”

Another report showed US pending home sales fell unexpectedly last month to reach their lowest-level in five months. The index from the National Association of Realtors decreased 1.4% month-on-month in August to 109.4 compared with analysts’ expectations for a 0.4% gain and with a 0.5% increase in the previous month.

Meanwhile, Federal Reserve official William Dudley said the central bank will “probably” raise interest rates later this year. Speaking at an event in New York hosted by The Wall Street Journal the president of the New York Fed said, "I think that the economy is doing pretty well", although his expectation was for growth in the second half to be “a little bit weaker” than the first half.

His remarks mirrored that of Fed Chair Janet Yellen’s last week when she said a rate hike was expected this year unless the global economic outlook worsened.

Companies

SABMiller jumped following a Sunday Times report that Anheuser-Busch InBev SA could bid about $106bn for the company much sooner than originally anticipated. Talks between the two brewing giants are said to have been warming up and carried on over the weekend.

Vodafone dropped after ending talks with Liberty Global about a merger of the European businesses.

BAE Systems gained after Bernstein upgraded the stock ‘outperform’ from ‘market perform’, with an unchanged price target price of 545p.

Ultra Electronics rallied after JP Morgan Cazenove upgraded the stock to ‘overweight’ from ‘neutral’.

Home Retail Group advanced after Cantor Fitzgerald upgraded the company to ‘buy’ from ‘hold’.

Market Movers

techMARK 3,006.07 -1.78%

FTSE 100 5,958.86 -2.46%

FTSE 250 16,614.16 -1.11%

FTSE 100 - Risers

SABMiller (SAB) 3,634.50p +1.30%

BAE Systems (BA.) 444.50p +1.02%

ITV (ITV) 250.50p +0.93%

National Grid (NG.) 898.00p +0.80%

Morrison (Wm) Supermarkets (MRW) 155.50p +0.78%

Sky (SKY) 1,041.00p +0.68%

Associated British Foods (ABF) 3,251.00p +0.31%

FTSE 100 - Fallers

Glencore (GLEN) 68.62p -29.42%

Anglo American (AAL) 552.70p -10.09%

BHP Billiton (BLT) 964.10p -6.03%

Antofagasta (ANTO) 481.00p -4.94%

Standard Chartered (STAN) 627.80p -4.91%

Vodafone Group (VOD) 207.20p -4.80%

Rio Tinto (RIO) 2,111.00p -4.78%

ARM Holdings (ARM) 940.00p -4.28%

Johnson Matthey (JMAT) 2,415.00p -3.94%

Barclays (BARC) 245.20p -3.82%

FTSE 250 - Risers

Home Retail Group (HOME) 136.30p +2.10%

Renishaw (RSW) 2,011.00p +1.98%

Ultra Electronics Holdings (ULE) 1,684.00p +1.51%

Poundland Group (PLND) 279.20p +1.42%

Saga (SAGA) 204.00p +1.34%

Ophir Energy (OPHR) 82.30p +1.29%

Mitie Group (MTO) 287.40p +1.23%

AO World (AO.) 161.80p +1.12%

Big Yellow Group (BYG) 719.00p +0.98%

Ted Baker (TED) 3,195.00p +0.95%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 74.75p -26.35%

Allied Minds (ALM) 334.10p -12.08%

Tullow Oil (TLW) 157.60p -7.02%

Worldwide Healthcare Trust (WWH) 1,700.00p -6.90%

Just Retirement Group (JRG) 162.40p -6.67%

Premier Oil (PMO) 63.10p -6.03%

Vedanta Resources (VED) 429.10p -5.78%

John Laing Group (JLG) 190.00p -4.95%

Weir Group (WEIR) 1,114.00p -4.46%

CLS Holdings (CLI) 1,795.00p -4.22%

FTSE TechMARK - Risers

BATM Advanced Communications Ltd. (BVC) 20.75p +2.47%

Filtronic (FTC) 6.62p +1.92%

Torotrak (TRK) 6.85p +1.86%

SDL (SDL) 329.00p +1.86%

Consort Medical (CSRT) 934.50p +1.03%

NCC Group (NCC) 270.25p +0.84%

Ricardo (RCDO) 900.00p +0.61%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 202.30 +0.37%

Dialight (DIA) 630.00p +0.32%

FTSE TechMARK - Fallers

Oxford Biomedica (OXB) 8.35p -2.34%

RM (RM.) 162.00p -1.82%

Oxford Instruments (OXIG) 566.50p -1.56%

XP Power Ltd. (DI) (XPP) 1,575.00p -1.44%

Skyepharma (SKP) 359.75p -0.90%

Sepura (SEPU) 172.50p -0.72%

E2V Technologies (E2V) 227.50p -0.66%

Innovation Group (TIG) 39.00p -0.64%

Spirent Communications (SPT) 74.25p -0.34%

KCOM Group (KCOM) 89.75p -0.28%