NEW YORK, March 20 (Reuters) - Small cap stocks retreated from an all-time high on Tuesday after concerns about China's economic growth dampened the recent strong run in equity markets.
BHP Billiton, the world's largest miner, said it was seeing signs of "flattening" iron ore demand from China. The news was a worry for investors who are on the look out for any sign the Chinese economy, the main driver of global growth, is starting to slow.
Shares in the energy and commodities-related sectors suffered the most, concomitant with a fall in raw materials prices, namely oil and copper. The S&P mid cap industrial sector fell 1.6 percent. Terex Corp, a diversified equipment maker, fell 3.8 percent to $24.55.
Despite Tuesday losses, small and mid caps are set to continue to benefit from strength in the U.S. dollar and an improving U.S. economy said Phil Orlando, chief market strategist and senior portfolio manager at Federated Global Investment Management Group in New York.
Smaller companies have less exposure to overseas markets and suffer less from the distorting effects of a weaker euro than larger counterparts that repatriate overseas earnings. "The currency here has been a tailwind for small caps," he said.
The S&P MidCap 400 index dipped 0.7 percent while the S&P SmallCap 600 index lost 1 percent. In comparison, the benchmark S&P 500 fell 0.3 percent.
The small cap index hit an all time intraday high of 469.09 on Monday after rallying nearly 40 percent since early October.
Chinese solar panel manufacturers listed in New York rose sharply after the United States set lower than expected tariffs on solar panels imported from China.
Shares in Suntech Power, which had sunk earlier in the day, quickly jumped after the report to trade 14.1 percent higher, while Trina Solar shares rallied 7.9 percent and Yingli Green Energy shares surged 12.1 percent.
Tanker operator Frontline fell after European Union diplomats postponed a decision on whether to grant any exemptions to insurance provided for Iranian crude shipments when the bloc implements oil sanctions on Iran. The shares were down 8.7 percent to $7.56.
Shares of Jefferies Group Inc rose 2.3 percent to $19.49. The securities firm reported stronger fixed-income trading and underwriting revenue, a signal that Wall Street's most lucrative businesses are staging a comeback.
AstraZeneca has thrown in the towel on an experimental antidepressant targeting nicotine receptors after the drug licensed from Targacept failed in two remaining clinical trials. Targacept shares fell 30 percent to $5.19.