London close: Stocks pulled lower by mining slump after China sell-off

London stocks ended lower on Friday on a slump in the mining sector as commodity prices declined.

The FTSE 100 finished down 17.98 points to 6,375.15 led by Anglo American, Fresnillo, Glencore and Randgold Resources. Gold, silver and platinum prices fell, although copper continued Thursday’s gains. Oil prices dropped with Brent crude down 0.84% to $45.08 per barrel and West Texas Intermediate down 1.04% to $42.05 per barrel at 1640 GMT.

"Gains are proving hard to sustain as the week comes to an end, and with US markets on a half day and important events looming, most investors are struggling to find a rationale to keep buying into equities. Two days of gains, helped along by thin volumes, have given way to modest losses," said IG senior market analyst Chris Beauchamp.

"Chinese stocks overnight brought back unhappy memories of August, and as a result we saw heavy losses for miners once again."

The Shanghai composite finished down 5.49%, the largest daily percentage loss since 18 August as Chinese authorities investigated brokerages Citic Securities Co. and Guosen Securities over suspected violations.

Following the sharp sell-off in China, US stocks followed suit as the market reopened for trading. The US stock market will close early at 1800 GMT for the Thanksgiving holiday.

Meanwhile, investors seemed to shrug off UK economic growth data as there were no surprises. The second estimate of third quarter UK gross domestic product from the Office for National Statistics showed an annualised unrevised growth of 2.3% in October, as expected by analysts. The quarter-on-quarter comparison was also unrevised at 0.5% growth in the three months to September, down from 0.7% in the second quarter and in line with forecasts.

“Confirmation of reduced GDP growth of 0.5% quarter-on-quarter in the third quarter reinforces our belief that the Bank of England is unlikely to raise interest rates before the second quarter of 2016,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“However, we do expect the Bank of England will act before mid-2016. This is based on our belief that the UK will see some improvement in growth from its third quarter soft patch and that consumer price inflation will start rising gradually from late-2015.”

Other data published by research company GfK showed UK consumer confidence declined to a six-month low in November. The consumer sentiment index declined from 2 points to 1 in October, the lowest level since May and falling short of analysts’ expectations for an unchanged reading.

UK house prices growth slowed by more than expected in November to record the smallest rise since June, according to research by the Nationwide Building Society. The Nationwide house price index rose 0.1% in November compared to the previous month, down from the 0.6% monthly rise recorded in October, and lower than the consensus forecast for a 0.50% increase. The year on year measure showed a 3.7% increase, lower than the estimated 4.2% and down slightly from October's five-month high of 3.9% and 3.8% in September and the 26-month low of 3.2% in August.

Chancellor George Osborne's new 3% surcharge on Stamp Duty on buy-to-let (BTL) properties and second homes, which was announced this week and will come into force from April 2016, is expected to lead to a frantic rush as prospective investors snap up properties in the next four months to avoid the new charge.

Elsewhere, Japanese data overnight showed an unexpected fall in the jobless rate to 3.1% in October from 3.4% the previous month, while the consumer price index rose to 0.3% year-on-year last month from 0%, as anticipated by analysts. However, CPI fell 0.1% year-on-year, as predicted, when stripping out volatile food prices.

Japan’s household spending dropped 2.4% in October, compared to forecasts of 0% and September’s 0.4% decrease. The reports come amid pressure on the Bank of Japan to increase its bond buying programme in the coming months following prolonged weakness in inflation.

“While Japan’s Jobless data improved, inflation showed need for continued BoJ stimulus,” said Michael van Dulken and Augustin Eden at Accendo Markets.

Japan's Nikkei 225 closed down 0.30% following the data.

Among companies, water utility Severn Trent was a high riser for the second day in a row after it posted a 36% rise in first half pre-tax profit on the back of cost-cutting.

Anglo American was the standout loser as it announced the closure of its Drayton coal mine in Australia next year after the New South Wales Planning and Assessment Commission recommended that the government block an expansion of the mine.

Betfair gained after Deutsche Bank upgraded the stock to ‘buy’ from ‘hold’ and lifted the price target to 4,200p from 2,650p. The bank said it reckons Betfair can grow revenues/profits materially above the market growth rate following the group’s relentless focus on product innovation coupled with brand investment over the past 24 months.

HSBC edged lower on news it will shut down its private banking business in India by March of next year and the 70 people working in the division will be moved to the retail bank.

SVG Capital advanced after reporting a 3% increase in net asset value for the three months to 31 October.

Market Movers

FTSE 100 (UKX) 6,375.15 -0.28%
FTSE 250 (MCX) 17,251.86 0.21%
techMARK (TASX) 3,226.10 0.14%

FTSE 100 - Risers

Inmarsat (ISAT) 1,113.00p 2.30%
Severn Trent (SVT) 2,248.00p 2.09%
Dixons Carphone (DC.) 481.00p 1.52%
United Utilities Group (UU.) 978.50p 1.29%
Admiral Group (ADM) 1,621.00p 1.25%
Babcock International Group (BAB) 1,084.00p 1.21%
Relx plc (REL) 1,197.00p 1.18%
Rolls-Royce Holdings (RR.) 606.50p 0.83%
G4S (GFS) 223.50p 0.72%
Compass Group (CPG) 1,141.00p 0.71%

FTSE 100 - Fallers

Anglo American (AAL) 400.55p -8.09%
Fresnillo (FRES) 715.00p -4.54%
Randgold Resources Ltd. (RRS) 3,997.00p -4.29%
Glencore (GLEN) 91.88p -4.17%
Antofagasta (ANTO) 496.20p -4.12%
Rio Tinto (RIO) 2,196.50p -3.28%
BHP Billiton (BLT) 807.60p -3.07%
Johnson Matthey (JMAT) 2,799.00p -2.85%
Aberdeen Asset Management (ADN) 334.70p -2.56%
Standard Chartered (STAN) 558.60p -1.24%

FTSE 250 - Risers

Pennon Group (PNN) 883.00p 5.50%
OneSavings Bank (OSB) 371.20p 5.39%
Supergroup (SGP) 1,640.00p 4.79%
SVG Capital (SVI) 478.10p 3.91%
Paragon Group Of Companies (PAG) 376.80p 3.80%
Thomas Cook Group (TCG) 117.90p 3.69%
Nostrum Oil & Gas (NOG) 376.30p 3.27%
Halfords Group (HFD) 371.10p 3.17%
Zoopla Property Group (WI) (ZPLA) 226.50p 3.10%
Kier Group (KIE) 1,321.00p 2.64%

FTSE 250 - Fallers

Polymetal International (POLY) 537.00p -3.07%
Tullow Oil (TLW) 198.40p -2.98%
Acacia Mining (ACA) 171.80p -2.83%
TalkTalk Telecom Group (TALK) 244.10p -2.36%
Jimmy Choo (CHOO) 141.20p -2.28%
Aggreko (AGK) 1,004.00p -2.24%
Ophir Energy (OPHR) 99.25p -2.12%
Circassia Pharmaceuticals (CIR) 277.00p -2.12%
Ted Baker (TED) 3,209.00p -2.08%
Weir Group (WEIR) 1,173.00p -2.01%