London midday: Miners tank on Chinese growth fears

20th Mar 2012 12:02

- Inflation falls but not as much as expected- Miners fall on Chinese demand concerns- National Grid advances after a kind word from NomuraThe Footsie slumped to its lowest levels of the day by midday, down a whole percentage point, after UK inflation fell at a lower-than-expected pace and worries over economic growth in China prompted a dive in London's equity markets.Concerns about slowing growth in China seems to have dampened sentiment, with miners bearing the brunt of the sell-off as falling house prices and rising fuel costs are feared to be limiting economic expansion. Comments from both BHP Billiton and Rio Tinto's executives have also weighed on the Chinese demand outlook for metals (see below). Meanwhile, China raised its fuel prices for the second time in less than six weeks - the world's second-largest oil consumer upped prices by 600 yuan ($95) a metric ton. Christine Lagarde, the Managing Director of the International Monetary Fund (IMF) warned today that the attention has shifted away from Europe to surging oil prices - over concerns that are "either supply-driven or come from geopolitical tensions" - which may cause the next threat to global growth.INFLATION EASES A LITTLEIn domestic news, price rises continued to ease in February, with UK inflation slowing to 3.4% in February, down from 3.6% the month before. However, the drop was slightly less than expected, with analysts hoping it would come in at 3.3%. This will fuel concerns that inflation could prove a tougher nut to crack than expected over the coming months, particularly given current high oil prices.Dr Howard Archer, chief UK Economist at IHS, said that if consumer price inflation did prove to be sticky over the coming months, this would have worrying implications for UK growth prospects. Nevertheless, Barclays Capital analyst Chris Crowe said: "although we remain concerned by the continued evidence of elevated near-term price pressures, February's sharp decline provides some reassurance that the further declines in inflation that we expect are in train." According to the Financial Times, the Office for Budget Responsibility is to revise its UK growth forecasts higher in tomorrow's Budget. Economist expect the OBR to up its GDP growth estimate from 0.7% to 0.8% for 2012. In Eurozone news, the Spanish Treasury issued a total of €5.05bn in government debt, slightly above the target range of €4.5-5bn. Yields on both the 12- and 18-month notes fell from the previous auction.Meanwhile, US Treasury Secretary Tim Geithner took it upon himself to point out to the European Union that it was still at the beginning of a long and difficult path to recovery and to warn against the use of "draconian" measures that could hurt growth to fix budget problems. MINERS TANK ON CHINESE WORRIESMining heavyweights were registering losses ranging from 3% to 5% this morning after BHP Billiton warned that Chinese demand for iron ore is "flattening". Ian Ashby, President of BHP's iron ore division, told reporters in Australia that "the (Chinese) economy is shifting, it's changing. Steel growth rates will flatten and they have flattened."Meanwhile, Rio Tinto's Managing Director of expansion projects David Joyce also said that the "rate of GDP growth in China is more immediately slowing". Nevertheless, he assured that the company remains confidence of a soft landing for the economy.Both BHP Billiton and Rio Tinto were among the worst performing stocks by midday, while sector peers Fresnillo, Vedanta, Antofagasta, ENRC, Kazakhmys, Randgold and Anglo American were also suffering heavy losses.Heading the other way was energy firm National Grid after being hailed as the top pick of the UK utilities sector by Nomura. The broker said it offers "growth opportunity in UK transmission and screens well on relative value." Chip designer ARM Holdings was making gains after both Barclays Capital and Investec upgraded their ratings on the stock. FTSE 250: REGUS TANKS DESPITE STRONG PROFITS Office space provider Regus fell over 6% despite reporting operating profits that more than doubled in 2011. The firm said profits came in at £50.6m, up from £23.9m in 2010, with sales up 12% to £1.16bn, in line with analysts expectations. The company said it would open 200 new offices this year. SuperGroup, the fast-growing owner of the Superdry brand, rose after revealing that it is to change its finance director and create a new role of chief operating officer. Retailing peer Debenhams was in demand after saying that like-for-like sales in the first half of its financial year edged higher, with growth accelerating towards the end of the period. Oil firm Cairn Energy advanced after it racked up a $1.19bn loss in 2011 but said it was still optimistic about striking it big in Greenland. BCFTSE 100 - RisersVodafone Group (VOD) 170.15p +1.67%Tesco (TSCO) 333.15p +0.65%Whitbread (WTB) 1,732.00p +0.64%National Grid (NG.) 635.50p +0.55%Hargreaves Lansdown (HL.) 492.20p +0.22%Capita (CPI) 748.00p +0.20%RSA Insurance Group (RSA) 115.20p +0.17%ARM Holdings (ARM) 581.00p +0.17%Legal & General Group (LGEN) 135.00p +0.15%Marks & Spencer Group (MKS) 380.30p +0.08%FTSE 100 - FallersFresnillo (FRES) 1,700.00p -4.28%Vedanta Resources (VED) 1,364.00p -3.81%Antofagasta (ANTO) 1,202.00p -3.53%Rio Tinto (RIO) 3,488.00p -3.50%Randgold Resources Ltd. (RRS) 6,345.00p -3.28%Anglo American (AAL) 2,527.50p -3.25%Kazakhmys (KAZ) 934.00p -3.21%Eurasian Natural Resources Corp. (ENRC) 665.50p -3.20%GKN (GKN) 208.50p -3.20%ITV (ITV) 86.40p -3.14%FTSE 250 - RisersCable & Wireless Worldwide (CW.) 36.87p +5.67%Essar Energy (ESSR) 147.50p +4.02%Spirit Pub Company (SPRT) 57.75p +3.12%Cairn Energy (CNE) 340.90p +2.71%Babcock International Group (BAB) 760.50p +2.29%St James's Place (STJ) 379.10p +1.83%Henderson Group (HGG) 129.80p +1.72%Gem Diamonds Ltd. (DI) (GEMD) 285.20p +1.49%COLT Group SA (COLT) 101.60p +1.40%BH Macro Ltd. EUR Shares (BHME) € 19.80 +1.02%FTSE 250 - FallersExillon Energy (EXI) 191.30p -6.68%Regus (RGU) 105.50p -6.47%Bumi (BUMI) 737.50p -4.84%Perform Group (PER) 299.60p -4.74%Ophir Energy (OPHR) 420.50p -4.61%Ferrexpo (FXPO) 323.60p -4.12%Invensys (ISYS) 201.70p -3.86%Taylor Wimpey (TW.) 50.15p -3.56%Kesa Electricals (KESA) 74.50p -3.56%Hochschild Mining (HOC) 471.30p -3.52%