Miners pull FTSE lower after China rate rise

* FTSE 100 down 0.3 percent but technicals supportive

* Defensives, miners lose ground

* Banks add to Monday’s gains

* Apple weighs on technology stocks, but Autonomy up

By Simon Falush

LONDON, Oct 19 (BestGrowthStock) – Britain’s top share index fell
slightly around midday on Tuesday as a surprise rate hike by
China put pressure on mining stocks, offsetting gains from banks
on solid results from Citigroup and Bank of America.

By 1135 GMT the FTSE 100 (.FTSE: ) was 15.15 points or 0.3
percent lower at 5,756.14 after it gained 0.7 percent on Monday.

China will raise its benchmark one-year lending and deposit
rate by 25 basis points effective from Oct. 20, the central bank
said on Tuesday. [ID:nBJI002412]

This put pressure on mining stocks on worries that higher
borrowing costs may crimp demand in the fast-growing economy.

Xstrata (XTA.L: ) was the biggest faller, down 4.7 percent,
also pressured by mixed third-quarter production figures for its
two key products. [ID:nLDE69H1NG]

Rio Tinto fell 1.8 percent while Vedanta Resources (VED.L: )
lost 2.3 percent.

“It has ramifications for the mining stocks, but you could
argue that it reflects a move to prevent a real estate bubble
which will be good for the country in the medium term,” Graham
Secker, European equity strategist at Morgan Stanley, said.

“I don’t think it heralds the start of more rate rises
elsewhere.”

Banks were the biggest support for the index, lifted by
better-than-expected results from Citigroup (C.N: ) on Monday.

Bank of America Corp (BAC.N: ), the largest U.S. bank by
assets, said on Tuesday that its third-quarter net loss
quadrupled from a year ago. [ID:nN19106691]

However, excluding a non-cash goodwill charge the bank
reported net income of $3.1 billion, or 27 cents per share,
beating analysts’ forecast for EPS of 16 cents, according to
Thomson Reuters I/B/E/S.

Majority state-owned Royal Bank of Scotland (RBS.L: ) added
2.4 percent while Barclays (BARC.L: ) gained 1.6 percent.

TECHNICAL SUPPORT

The index has posted nearly 10 percent gains since the start
of September, and technical analysts see little in the way of
obstacles for further strength.

“The index has broken out of the summer range and has stayed
above that ever since, it’s taken out a lot of retracement
levels,” said Phil Roberts, chief European technical strategist
at Barclays Capital.

“The market has been doing well, a nice steady grind
higher.”

Energy stocks fell, weighed down by a 1 percent drop in the
price of crude oil (CLc1: ). BG Group (BG.L: ), BP (BP.L: ) and Royal
Dutch Shell (RDSa.L: ) all declined 0.3-0.8 percent.

ARM Holdings (ARM.L: ) retreated 2.6 percent, pressured as
Apple — for whom it designs chips — disappointed investors with
weaker-than-expected gross margins and iPad shipments.

British factory orders fell at their sharpest pace since
April, the CBI’s October industrial trends survey showed on
Tuesday. [ID:nAHLILE684]

But David Buik, senior partner at BGC Partners, said the
outlook for UK equities looks to be set fair, despite tough
times ahead for the domestic economy.

“(The FTSE 100) pays decent dividends, 70 percent of
earnings come from overseas and we’ve been cheered so far by a
decent set of earnings, and I don’t see any other asset class as
looking attractive.”

Autonomy (AUTN.L: ) bucked a weaker trend for European tech
stocks, gaining 4.4 percent to top the blue-chip leaderboard
after it said fundamental demand for its products remained
strong and it could still beat expectations for 2011.
[ID:nLDE69I06Y]
(Editing by Michael Shields)

Miners pull FTSE lower after China rate rise