Mining sector losses and fall-off in US consumer spending pull Footsie down

FTSE: 5,718.39 (–56.04) Mid-250: 11,199.64 (–254.39) Small Cap: 3,226.54 (–37.31):UK STOCKS declined for a third day yesterday after US consumer spending unexpectedly dropped for the first time in almost two years, deepening concern that growth in the world's largest economy is stalling.

Xstrata led a retreat by mining companies, after posting earnings that missed analysts’ estimates.

The FTSE 100 fell 56.04, or 1 per cent, to 5,718.39 in London, its lowest level in five weeks.

Data coming out of the US “shows how fragile sentiment is,” said David Jones, chief market strategist at IG Index in London.

“People feel very nervous at the moment,” he said.

The House of Representatives approved legislation on Monday to increase the US debt limit by $2.1 trillion and cut federal spending by $2.4 trillion. The Senate will vote on the deal later.

Consumer spending in the US fell 0.2 per cent in June as a slump in hiring caused households to retrench, commerce department figures show.

Xstrata sank 3.6 per cent to 1,235.5p after posting first-half earnings before interest, taxes, depreciation and amortization that increased 30 per cent to $5.82 billion. That missed the average analyst estimate of $5.93 billion.

Rio Tinto, the world’s second-largest mining company, fell 2.5 per cent to 4,176p.

BHP Billiton dropped 1.9 per cent to 2,214.5p.

Hargreaves Lansdown, Britain’s largest retail broker, slumped 13 per cent to 506.5p, its biggest drop since its initial public offering in 2007.

Centamin Egypt fell 20 per cent to 109.6p, the gold producer’s biggest decline since its initial public offering in 2001.

Fresnillo, the world’s largest primary silver producer, jumped 4.6 per cent to 1,813p after reporting first-half net income of $553.2 million, more than double the $258.9 million it posted a year earlier.

BP, Europe’s second biggest oil company, dropped 2.4 per cent to 447.1p as crude declined for a third day in New York.

Amlin plunged 16 per cent to 335p.

Northumbrian Water led a rally of UK water utilities, rising 4.5 per cent to 469.5p after a group led by Cheung Kong Infrastructure agreed to buy the company for £2.4 billion.

National Grid, operator of the UK’s power and gas networks, gained 2 per cent to 602.5p. – (Bloomberg)