U.K. Stocks Drop Amid Chinese Growth Concern; BHP Falls

U.K. stocks tumbled by the most in two weeks as concern about slowing growth in China, the world’s second-biggest economy, sparked a selloff in metal producers.

Rio Tinto Group and BHP Billiton Ltd. (BHP) dropped more than 4 percent after executives from both companies warned of a slowdown in China and as copper inventories rose in Shanghai. Debenhams Plc (DEB) paced advancing shares after the retailer reported a pickup in sales growth.

The FTSE 100 (UKX) fell 1.2 percent to 5,891.41 at the London close, the biggest drop since March 6. The gauge yesterday slid from an eight-month high after Chinese house price data recorded the worst month in at least a year. The FTSE-All Share Index lost 1.2 percent today, while Ireland’s ISEQ Index retreated 0.9 percent.

“The Chinese government is trying to manufacture a moderate slowdown,” said Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers in London. “For the time being, investors will take that with a pinch of caution. News of rising fuel prices in China on the back of falling house prices may have damped investor sentiment.”

China, the world’s largest oil consumer after the U.S., yesterday increased gasoline and diesel prices for the second time in less than six weeks after crude last month gained the most in a year. Earlier this month the Chinese government cut its target for annual economic growth this year to 7.5 percent from a previous forecast of 8 percent.

Rio, BHP Billiton

Rio Tinto, the world’s third-largest mining company, dropped 4.2 percent to 3,464.5 pence as a gauge of U.K. metal producers lost 3.6 percent to below its 200-day moving average.

“The rate of GDP growth in China is more immediately slowing,” Rio’s David Joyce, managing director of expansion projects, said at a conference in Perth, Australia. “We remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year.”

Larger rival BHP slid 4.1 percent to 1,965 pence after the company said China’s steel production is slowing as the country shifts its focus away from large building projects to consumers.

Kazakhmys Plc (KAZ) fell 2.5 percent to 940.5 pence, Antofagasta Plc (ANTO) slid 3.6 percent to 1,201 pence and Vedanta Resources Plc (VED) retreated 4 percent to 1,361 pence.

Copper slid by the most in two weeks on the London Metal Exchange amid rising stockpiles in China.

Inventories at bonded warehouses in Shanghai climbed to 530,000 tons last week, according to the median estimate in a Bloomberg News survey of traders and analysts. This compares with about 200,000 tons in the fourth quarter, said Qu Yi, an analyst at CRU International Ltd.

Glencore, Hochschild

Glencore International Plc slid 1.6 percent to 413.8 pence after the largest publicly traded commodity supplier agreed to buy Viterra Inc. for C$6.1 billion ($6.15 billion) to add grain assets in Canada and Australia.

Hochschild Mining Plc (HOC), a producer of precious metals in Peru and Argentina, tumbled 5.2 percent to 462.9 pence even as the company reported a 42 percent rise in full-year profit today.

The shares fell with the price of gold amid concern that demand will drop in India and China, the world’s biggest buyers.

India’s demand may plunge 35 percent this year after the government increased the gold-import tax, according to the Bombay Bullion Association.

Debenhams Store Sales

Elsewhere, Debenhams climbed 1.1 percent to 76.55 pence as the U.K.’s second-largest department-store company reported a 2.4 percent rise in sales at stores open at least a year in the eight weeks to March 3. Growth for the 26 weeks to that date was 0.3 percent.

Chief Executive Officer Michael Sharp said the retailer is “comfortable” with the outlook for the year.

Cable & Wireless Worldwide Plc (CW/) jumped 8.9 percent to 38 pence after Dow Jones reported Tata Communications Ltd. is close to making a formal cash bid for the company.

Vodafone Group Plc, which may also make a formal offer for C&W Worldwide, rose 2.1 percent to 170.80 pence. The deadline for both companies to submit an official offer is March 29.

Separately, India’s Supreme Court reaffirmed its earlier dismissal of a $2.2 billion tax claim on Vodafone after the government last month petitioned it to reconsider its decision.

Henderson Group Plc (HGG) slid 0.9 percent to 126.5 pence. The shares earlier climbed to a six-month high after the Daily Mail reported it may be acquired by a financial-services company, without saying where it got the information.

The fund manager said on Feb. 29 that clients pulled 6.4 billion pounds of assets last year and warned of an “uncertain” outlook for 2012.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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