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FTSE 100 falls on global growth outlook

Last updated: 00:24 05 Mar 2013 AEDT, First published: 01:24 05 Mar 2013 AEDT

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The UK’s top shares started the week lower as concerns over the outlook for global growth re-emerged.

China’s services industry expanded last month at the slowest pace since September, sparking renewed fears over its waning growth.

Meanwhile in the US, automatic spending cuts known as the sequester took effect. US President Barack Obama warned that the £56bn that will be taken from the US federal budget this year could hurt the world’s largest economy.

Last ditch talks with House Speaker John Boehner failed, meaning the wave of cuts drafted up two years ago came into effect.

The IMF has warned the sequester could slow global economic growth.

Closer to home, things were not helped when figures showed UK construction output fell for a fourth month in a row in February.

The Footsie was down 25 points or 0.4% lower at 6,354 by lunch.

Michael Hewson from CMC Markets believes tomorrow’s services PMI number could well be the swing on which a decision over more quantitative easing (QE) could hinge this week.

“There is the likelihood that the Bank of England could well do nothing given the recent fall in the value of sterling in the past few weeks,” the analyst added.

Kazakh copper producer Kazakhmys (LON:KAZ) was the top faller, down 5% as mining stocks took a beating on growth fears.

Rio Tinto (LON:RIO) lost 3.7%, while Anglo American (LON:AAL), which suffered a downgrade from Nomura, shipped 2.7%.

HSBC (LON:HSBA) meanwhile dropped 2% after its full-year results missed estimates.

Lloyds Banking Group (LON:LLOY) continued its decline since its annual results on Friday, down another 3.7% today.

Centrica (LON:CNA) shares warmed up as analysts at Société Générale upgraded the British Gas owner to ‘buy’.

On the FTSE 250, retail shares were under pressure as Debenhams (LON:DEB) issued a shock profit warning, blaming the snow for stopping shoppers visiting its stores in January. Shares slumped 12%.

It knocked fellow retailers, with Next (LON:NXT), down 3% on the top tier, and Argos owner Home Retail Group (LON:HOME) falling 3.5%.

Thomas Cook (LON:TCG) shares were grounded, down 3.4% when the tour operator chose to stick by its struggling French business much to the dismay of investors.

Over on AIM, Aminex (LON:AEX) and Solo Oil (LON:SOLO) made big gains as their as the farm-out process for the Ruvuma basin draws to a close.

The last update a few weeks ago from Aminex said potential partners – thought to include majors and national oil companies (NOCs) – requested a little more time to evaluate the data and said that deadline for final cut-off would be “early March”.

Together the partners intend to farm-out half of their respective project equity – Aminex currently owns 75%, while Solo owns the other 25%.

Investors speculating that the bidding will close this week, and a farm-in partner selected shortly after saw Aminex shares leap 13% and Solo climb 9%.

Atlantic Coal (LON:ATC) jumped 10%, followed closely by smart-metering specialist Cyan Holdings (LON:CYAN).

Forbidden Technologies (LON:FBT) powered 8% higher bagged a new contract with Deltratre, the sports media services company. Deltatre has licensed Forbidden’s FORscene cloud-based video platform, and will incorporate it into the video production services it provides its clients.

Victoria Oil & Gas (LON:VOG) climbed 7.7%, with Vane Minerals (LON:VML) up 6.5%.

Baobab Resources (LON:BAO) raced ahead in early play but pulled back a touch by lunch, up 1.7% after it hailed metallurgical tests that showed a low impurity pig iron product can be produced using its iron ore and local Mozambique thermal coal.

 

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