U.K. stocks declined, extending a five-month low for the FTSE 100 Index, as mining companies tumbled with metal prices amid concern that a cash crunch in China will reduce demand.
Vedanta Resources Plc (VED) dropped 6.5 percent after copper sank to its lowest price in almost three years. Rio Tinto Group lost 3.4 percent as the company abandoned the sale of its diamond unit. Banks also retreated as bond yields climbed across Europe.
The benchmark FTSE 100 lost 87.07 points, or 1.4 percent, to 6,029.1 at the close in London, its lowest level since Jan. 2. The gauge fell 3.1 percent last week, extending its selloff since May 22 to more than 10 percent, after the Federal Reserve indicated that it may start paring stimulus measures later this year if the U.S. economy improves.
“China is perhaps central to investors’ thoughts,” said Keith Bowman, an equity analyst at Hargreaves Lansdown Plc in London. “We have seen tightening in money markets over there, but authorities seem happy to stand back to allow that to happen to some degree.”
The FTSE All-Share Index lost 1.5 percent in London, while Ireland’s ISEQ Index fell 2.4 percent in Dublin. The volume of shares changing hands in FTSE 100 (UKX) companies was 4.6 percent greater than the average of the past 30 days.
Chinese stocks tumbled, entering a bear market, after the country’s central bank signaled it will maintain efforts to curb speculative lending and Goldman Sachs Group Inc. lowered its growth forecasts for the economy in 2013 and 2014.
While money-market rates fell for a second day from all-time highs, the overnight repurchase rate of 6.47 percent was more than double this year’s average of 3.09 percent, according to a fixing compiled by the National Interbank Funding Center.
Vedanta Resources slumped 6.5 percent to 1,026 pence as copper tumbled on the London Metal Exchange to its lowest price since July 2010. Antofagasta Plc (ANTO), the copper producer controlled by Chile’s Luksic family, slid 3 percent to 813 pence and Anglo American Plc (AAL) lost 4 percent to 1,297.5 pence.
Rio Tinto retreated 3.4 percent to 2,582 pence. The world’s second-largest mining company said it will keep its diamond assets after failing to find a buyer and deciding against an initial public offering for the unit. Rio Tinto had sought to sell the assets since March 2012.
Kazakhmys Plc (KAZ) tumbled 13 percent to 233.7 pence after the founders of Eurasian Natural Resources Corp. (ENRC) and the Kazakhstan government offered to buy ENRC with cash and Kazakhmys shares in a bid that values the company at 3.04 billion pounds ($4.7 billion). ENRC slid 1.4 percent to 213.8 pence.
HSBC contributed the most to a selloff by European banks as treasuries slumped, pushing 10-year yields to the highest since 2011, as government bonds from the U.K. to Germany and Ireland slid. HSBC, Europe’s biggest lender, lost 0.9 percent to 655.6 pence. Barclays Plc (BARC) slid 0.9 percent to 279.05 pence.
In Dublin, Bank of Ireland (BKIR) slipped 3.4 percent to 14.1 euro cents and Permanent TSB Group Holdings Plc (IPM) tumbled 13 percent to 2.6 cents. Allied Irish Banks Plc (ALBK), which is owned by the state, slid 1.5 percent to 6.5 cents.
Essar Energy Plc (ESSR) climbed 2.5 percent to 122 pence after reporting that revenue rose 24 percent to $27.3 billion in the 12 months through March. The company cited higher margins and volumes at its Vadinar refinery in India and its Stanlow refinery in the U.K.
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