London equities tumbled on Wednesday after sharp losses on Wall Street and in Asia kept the focus firmly on the economy and the outlook for corporate earnings.
The blue-chip FTSE 100 was 1.2 per cent weaker at 5,951.2, below the 6,000 for the first time since August, when the crisis on world credit markets first came to the fore. The mid-cap FTSE 250 fell 1.8 per cent to 9,587.9.
Shares in the London Stock Exchange, the operator of the market itself, were the biggest fallers, down 8.3 per cent at £15.69. Stanford Bernstein started coverage of the stock with an "underperform" rating and a £16 price target, on worries about its exposure to equities and ongoing pricing pressure.
In the mining sector, dealing room rumour linked Vedanta Resources with bid interest in Canada's First Quantum Minerals, revealed on FT Alphaville's Markets Live. The reports indicated a potential offer price of C$120 (£60) per share, valuing the Aim-quoted company at £4bn. Vedanta's stock lost 4.6 per cent to £18.98.
Meanwhile, Rio Tinto said it set annual production records for iron ore, bauxite, alumina, aluminium, refined gold and refined copper in 2007.
"Against a background of record prices for many of our commodities and a strong outlook for demand in developing markets, we look forward with confidence," the company said.
However, Rio shares, along with its mining sector rivals, fell as industrial metals prices extended recent sharp losses on fears possible recession in the US would significantly dent demand.
Rio, currently resisting takeover moves by peer BHP Billiton, fell 4.2 per cent to £47.85. Xstrata shed 4.7 per cent to £32.59, Anglo American lost 3.6 per cent to £27.56 and Lonmin fell 6 per cent to £33.30.
Pub groups and other leisure stocks sufffered as the health of the consumer was addressed by a trading statement from mid-cap operator Punch Taverns.
The company said like-for-like sales at its core managed estate fell by 2.2 per cent in the 20 weeks to January 5, as last year's smoking ban in England and Wales coincided with declining consumer confidence.
Punch added that it remained cautious over the short-term outlook for the pub sector, but said long-term prospects were good.
Shares in Punch fell 7.6 per cent to 571p, dragging other stocks in the sector with it. FTSE 100-listed Enterprise Inns fell 4 per cent to 376¼p, while blue-chip rival Whitbread shed 4.3 per cent to £10.57. Mitchells & Butler fell 5.4 per cent to 366¾p.
Hotels group Intercontinental fell 4.1 per cent to 674½p, while smaller rival Millennium & Copthorne shed 4.9 per cent to 317½p after Citigroup cut its rating to "hold" from "buy".
Data from the Royal Institute of Chartered Surveyors showed that house prices fell in December at the fastest rate since the early 1990s when the UK was in recession.
Shares in housebuilder Taylor Wimpey suffered, despite reporting on Tuesday that it anticipated no big house price falls in Britain, and that full-year results would be in line with estimates.
Taylor Wimpey fell 4 per cent to 153p, Bovis Homes lost 5 per cent to 546½p, Persimmon shed 4.2 per cent to 686p and Barratt Development slid 2.8 per cent to 333½p. Rightmove, the online estate agent, fell more than 8 per cent to 367p.
Experian, the information services group, fell 5.1 per cent to 356p after reporting fourth quarter organic revenues were up only 2 per cent and that trading conditions were likely to remain tough. The company announced plans to cut costs and added that it continued to target double-digit earnings growth for the full-year.
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