THE UK-listed mining sector began 2016 firmly in the red as the price of copper sank to a two-week low, after weak economic data from China triggered fresh concerns about the world’s largest metals consumer.
After slumping 24pc last year, three-month copper on the London Metal Exchange tumbled 2.3pc to $4,599, its lowest level since December 18.
Given their reliance on Asian consumption, mining stocks slipped towards the bottom of the blue-chip index after factory activity in China contracted for a 10th consecutive month in December. The Caixin China Manufacturing Purchasing Managers’ Index dipped to 48.2 last month, falling short of expectations that it would hit 49.
The latest round of poor data triggered sharp losses in Chinese companies and the country’s stock markets were suspended when they hit the limit of a 7pc daily fall.
Glencore was among the biggest casualties, down 5pc to 85.27p, while Anglo American fell 7pc to 277.85p. Antofagasta lost 5pc to close at 445.7p, BHP Billiton was changing hands at 736p - 3pc lower, and Rio Tinto slipped 4pc to £19.02p.
Connor Campbell, of SpreadEx, described the mining industry as “an aggressively negative landscape that doesn’t leave a lot of room for nuanced reactions to data”.
The sector suffered a torrid 2015, when in the face of an accelerating rout in commodity prices, mining companies came under increased pressure to slash capital expenditure and operational costs.
Elsewhere, precious metal firm Randgold Resources was among the few stocks to emerge unscathed from the latest mass sell-off. Bolstered by gold’s safe-haven status, amid rising geopolitical tensions in the Middle East, shares in the precious metal miner jumped 100p, or 2pc, to £42.43.
The price of gold rose by as much as 1pc in intraday trading to $1,073 per ounce, buoyed by investors’ risk-averse attitude in the wake of the weak economic data from China and Saudi Arabia’s move to sever diplomatic ties with Iran, following the storming of its embassy in Tehran.
Mike van Dulken, of Accendo Markets, said gold also enjoyed gains on the back of a weaker US dollar “as markets digest the Federal Reserve’s interest rate hike [on December 16] and plan for a slower than suggested rate-rise schedule”.
Elsewhere, after a rollercoaster 2015, financial markets worldwide began the year in the red. The FTSE 100 suffered its worst new year start in 16 years - down 148.89 points, or 2.4pc, to 6,093.43.
China-led malaise triggered a sharp sell-off across stock markets, as renewed fears about global growth plagued investors. European bourses fell steeply, with the German DAX and the CAC in Paris falling 4.3pc and 2.5pc respectively.
Alastair McCaig, of IG, said: “This swift return to the 2015 template of worrying about China looks to have been the trigger for the sell-off in Chinese equities. Starting the year off by suspending trading an hour and a half early on the back of a 7pc fall has set an ugly precedent for the year ahead.”
Asian-exposed bank Standard Chartered was among the top fallers in the wake of the turmoil in China. The bank’s shares slumped 22p, or 4pc, to 541.7p.
Meanwhile, luxury fashion house Burberry slipped 5pc to £11.40.
Oil stocks became late contenders for the FTSE top spot after the price of a barrel of Brent crude experienced ups and downs amid deteriorating relations between Saudi Arabia and Iran. The price of a barrel of Brent crude swung wildly from gains of 4pc to losses of 1pc in intraday trade.
Royal Dutch Shell B shares fell 5p to £15.38 and BG Group slipped 8.1pp to 976.9, and BP was one of the weakest in the sector. The FTSE 100 oil major closed down 2pc at 347.55p.
UK-listed insurers were rocked by a report from broker Shore Capital that suggested losses from recent flooding could be the costliest on record for the sector.
Eamonn Flanagan, of Shore Capital, said RSA Insurance could incur a loss of £50m from the flooding of a McVitie’s biscuit factory. In the wake of the report, shares in RSA Insurance fell 4pc to 410p. The FTSE 100 insurer also revealed the sale of its business in Italy to ITAS Mutua had been completed yesterday. Meanwhile, shares in Direct Line Insurance lost 14.9p to 392.6p, Legal & General was down 8.9p to 259.1p, and Aviva was off 18.4p at 497.6p.
Elsewhere, FTSE 100 drug maker Shire also found itself in negative territory amid reports it is close to buying US rival Baxalta for more than $30bn (£20.4bn). Shares in the Dublin-based company tumbled 245p, or 5pc, to £44.53.
Despite receiving the green light from the US Food and Drug Administration (FDA) for its Neostigmine Methylsulfate injection - a drug used to help patients recover from surgery - shares in Hikma ticked 68p lower to £22.33. Following the approval from the FDA, the Jordan-based company said it had launched the product in the US.
On the mid-cap index, Cairn Energy inched 2.7p higher to 160.4p thanks to positive results from an oil well off the coast of Senegal. Mark Wilson, of Jefferies, said the results removed “significant uncertainties” from project.
Finally, on Aim, technology group Trendit began trading on the main market of the London Stock Exchange yesterday, after it raised £4m from a share placing. The stock rose 20pc to 6.125p.
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