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Britain's FTSE falls as China demand fears hit miners
March 20, 2012 / 12:26 PM / 6 years ago

Britain's FTSE falls as China demand fears hit miners

* FTSE 100 down 0.6 pct

* Miners weigh after BHP Billiton warns on China demand

* Vodafone leads gainers, adds most points to index

By Alessandra Prentice

LONDON, March 20 (Reuters) - Britain’s blue-chip share index extended a technical retreat into a second session on Tuesday as concerns over demand from top metals consumer China hit heavyweight miners, although some were already positioning for further gains.

Miners, which account for a large part of the index, fell 3.1 percent after BHP Billiton, the world’s biggest miner, said it was seeing evidence of “flattening” iron ore demand from China.

Following metals prices into negative territory, mining rivals Rio Tinto and Kazakhmys were among the top fallers, down 3.6 percent and 3.2 percent respectively.

“With news from China in focus, the immediate sector to feel the crunch is anything commodites-linked, but it’s a buying opportunity,” Ed Woolfitt, head of trading at Galvan, said

“We’ll mainly use this pullback to revisit very good positions that have done well for us,” he said, citing UK-based oil explorer Tullow Oil, down 1.6 percent, as one such bet after recent positive news.

By 1201 GMT, The FTSE 100 was down 67.73 points, or 1.1 percent, at 5,893.33, having risen nearly 6 percent since the start of the year and hitting an eight-month closing high on Friday.

With part of 2012’s market rally driven by positive data from the United States, the market will look for further direction from U.S. housing figures out later, which, if better than expected, could help shares reverse some of the early losses.

“The FTSE remains extremely data-sensitive, particularly from the U.S. Today’s data is expected to show some bottoming out - if we see anything better than that it could lend a drive to the market,” Keith Bowman, equity analyst at Hargreaves Lansdown, said.

Among those to potentially get a boost from the data would be Wolseley, the world’s biggest building supplies company, Bowman said. The stock was down 1.7 percent near midday.

“Wolseley is seen as a fairly core play in terms of U.S. housing and construction, although how much is priced-in already is difficult to say,” he said.

The index still enjoyed strong technical support and was seen as merely experiencing a temporary pullback before heading towards last year’s highs in the 6,100 region, according to broker Cheuvreux.

“We do not exclude (an) addition(al) congestion phase before renewing strength towards the prior swing tops within the 6,050-6,100 target window,” the broker said in a note.

“The rising 50-day moving average would act as a strong support, currently at the 5,835 level.”

Vodafone was the top FTSE riser, up 1.7 percent, buoyed by sector rotation out of cyclical stocks and with Morgan Stanley suggesting now is a good time to buy into the stock, on valuation grounds, traders said.

One of the most heavily traded stocks, however, was Glencore , down 2.2 percent in volumes around 79 percent of their 90-day daily average after a source said a consortium including the commodities giant was close to a deal to buy Viterra Inc , Canada’s biggest grain handler.

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