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Britain’s FTSE share index headed for its biggest weekly drop in 2-1/2 years on Friday after slipping to a new six-week low, with a further drop in crude oil prices and disappointing Chinese economic data hitting commodity stocks.
The UK mining index fell 2.1 per cent in a seventh straight session of weakness, after data showed factory output in the world’s biggest metals consumer China rose 7.2 per cent in November from a year ago, slowing from October’s 7.7 per cent and against analysts’ forecasts of 7.5 percent.
The oil and gas index fell 1.6 per cent, tracking Brent crude oil, which continued its downward march and dropped to a 5-1/2-year low for a weekly loss of more than 8 per cent, amid persistent concerns over a global supply glut and a bearish demand outlook.
“Traders are assessing the impact of the fall in oil prices and selling positions in major oil producers. This is adding to the FTSE’s demise along with weaker data from China,’’ Tom Robertson, senior trader at Accendo Markets, said.
“But with a pullback in prices, this may represent a buying opportunity if your view is that the markets will go back up with the seasonal ‘Santa Rally’.’’
Commodity stocks Tullow Oil, BG Group, Rio Tinto and BHP Billiton fell 1.9 to 3.7 per cent, putting pressure on the blue-chip FTSE 100 index.
The benchmark index was down 1.4 per cent at 6,371.01 points by 0856 GMT after setting an intra-day low of 6,369.47, the lowest since late October. The index has fallen 5.6 per cent so far this week, the biggest weekly drop since mid-2012.
UK house builders fell following a note from Citi saying the sector’s positive outlook appeared to be priced in and valuations had generally become more stretched after a good bounce over the last three months. Persimmon fell 4.1 percent as Citi cut its stance to “neutral’’ from “buy’’.
On the positive side, water utilities Severn Trent and United Utilities rose 2.6 per cent and 3.3 per cent, respectively. Traders said the end of uncertainty — following water regulator Ofwat’s ruling on final tariffs the companies can charge customers until the end of the decade — helped water stocks.
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