FTSE off 0.4 percent; China tightening fears hit miners

By David Brett

LONDON (BestGrowthStock) – Britain’s leading share index fell 0.4 percent by midday on Thursday as heavy falls in miners, weighed by fears of monetary tightening in China, outpaced gains in general retailers and some defensives.

At 1203 GMT, the FTSE 100 was down 23.20 points at 5,617.37, having closed 0.7 percent higher on Wednesday, a 20-month peak.

Chinese consumer inflation rose more than expected in the year to February, while factory output and retail sales data for the first two months showed the economy started 2010 with a strong head of steam.

“The fear with Chinese growth is that they may have kept the oven cooking for a little too long and it may be time soon to switch it off with future rate hikes before inflation burns out of control,” said Nick Serff, market analyst at City Index.

“The limited news this week is giving this fear greater impetus.”

Miners were the heaviest fallers, dragged down as raw material prices retreated on fears that monetary tightening in China could hit future demand.

Fresnillo, Xstrata, Lonmin, Randgold Resources and Rio Tinto

were among the worst performers, down 1.6 to 2.4 percent.

But Antofagasta bucked the trend, up 1.2 percent, helped by upgrades from Goldman Sachs and Deutsche Bank.

Energy issues pared some recent gains as oil stagnated around $82 a barrel ahead of OPEC’s March 17 meeting with expectations that OPEC countries will pump above quotas in the second quarter, and with the Chinese economic data weighing.

Oil majors BG Group, Royal Dutch Shell, and BP shed 0.1 to 0.5 percent.

Oil explorer Tullow Oil fell 1.3 percent, extending the previous session’s losses, which came on the back of its 2009 results.

Banks were also the subject of some profit taking.

HSBC, Standard Chartered and Barclays fell 1 to 1.5 percent.

DRUGMAKERS FALL

Drugmakers continued their recent seesaw ride. GlaxoSmithKline, Shire and AstraZeneca dipped 0.2 to 0.5 percent, having been gainers on Wednesday.

Smith & Nephew shed 2.4 percent as the loss of a wound care products patent case in the U.S. dented sentiment in the British medical devices group.

Wm Morrison Supermarkets fell 1.8 percent and life insurer Old Mutual fell 2.9 percent after reporting their respective results.&

On the upside, Home Retail, Britain’s biggest household goods retailer, rose 2 percent as it nudged up its year profit guidance for the second time in three months.

Other general retailers rallied too, with Next, Marks & Spencer, and Kingfisher up 1.7 to 2.8 percent.

Travel firm Thomas Cook gained 2 percent as brokers returned in a positive mood following an Investor Day.

Oil services firm Petrofac climbed 3 percent, topping the risers list and extending recent gains, after positive broker comment followed upbeat results on Monday.

Investor interest was also on some defensive issues, which are perceived to be safer bets when the market falls.

British American Tobacco and Imperial Tobacco rose 0.4 and 0.8 percent respectively, while mobile communications giant Vodafone added 0.6 percent.

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(Editing by Hans Peters)

FTSE off 0.4 percent; China tightening fears hit miners