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UK stocks fall as weak China recovery drags down commodity shares

Industrial metal miners dipped 2.6% as prices of most base metals came under pressure. Heavyweight energy stocks fell 0.5% on lower oil prices.

Reuters

British equities slipped on Monday, with mining stocks leading declines after weak economic data from top commodities consumer China knocked down metal prices, while energy stocks mirrored a dip in crude prices.

The blue-chip FTSE 100 lost 0.4%, while the more domestically focussed FTSE 250 midcap index fell 0.9%. China's economy grew at a frail pace in the second quarter, with the post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus to shore up activity.

Industrial metal miners dipped 2.6% as prices of most base metals came under pressure. Heavyweight energy stocks fell 0.5% on lower oil prices.

Focus now shifts to UK consumer prices data due Wednesday, after data last week showed U.S. inflation easing. UK's inflation is expected to ease slightly in June to 8.2% from 8.7% a month ago. "My sense is that we're slightly past the worst of the inflation numbers and by the same token, I think the worst of the economic slowdown is where we are about now," said Andrew Bell, CEO of Witan Investment Trust.

An industry survey showed asking prices for residential homes in Britain fell in July as rising mortgage costs and increasing buyer affordability constraints prompted sellers to temper their price expectations. Housing related stocks such as real estate and homebuilders fell 1.7% and 0.8%, respectively.

The commodity-heavy FTSE 100 has fallen over 7% from the record-high levels hit in February as prices of oil and metals wavered on demand concerns in China. Among individual stocks, Aston Martin jumped 3.7% after Barclays raised the target price on the stock to 375 pounds.

Johnson Matthey gained 0.7% after Deutsche Bank upgraded the rating on the chemicals maker to "buy" from "hold." ($1 = 0.7641 pounds)

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