London falls as Lloyds and RBS shares slide on Fitch ratings downgrade

FTSE: 5,403.38 (–38.42) Mid-250: 10,230.52 (–89.48) Small Cap: 2,802.05 (–19.09)UK STOCKS fell from a two-month high yesterday, led by a sell-off in mining and financial companies, after Chinese export growth slowed and Fitch ratings downgraded Lloyds Banking and Royal Bank of Scotland.

The benchmark FTSE 100 Index slid 0.7 per cent in London, after rallying 11 per cent over the previous six days.

“After several days of risk-on trading for equity markets, yesterday saw a session of risk aversion,” said Angus Campbell, head of sales at Capital Spreads. “This time it was concerns over global growth that knocked sentiment as data from China showed exports slowing.”

Stocks on Wednesday rallied to the highest level since August 3rd amid growing optimism that euro zone policy makers will contain the region’s debt crisis.

European commissioner for Economic and Monetary Affairs Olli Rehn said the region was moving toward a consensus on resolving the “calamity”.

Antofagasta slid 6.3 per cent to 1,078p as metal prices declined. Kazakhmys lost 5.7 per cent to 878.5p and Vedanta Resources dropped 5.1 per cent to 1,199p.

Copper slid from a two-week high as data showed China’s export growth cooled to the weakest in seven months in September from a year earlier.

Rio Tinto fell 2.3 per cent to 3,283.5p even as the world’s second-largest mining company reported a 5 per cent increase in third-quarter iron ore output.

Lloyds dropped 5.5 per cent to 34.26p and RBS fell 6.4 per cent to 24.16p after Fitch cut its credit ratings for the banks, saying government support for the industry is less likely. Lloyds’s and RBS’s long-term issue default ratings were lowered two steps to A from AA. Barclays, the UK’s second-largest lender by assets, declined 7.4 per cent to 173.2p and Standard Chartered slid 1.6 per cent to 1,411.5p.

Ashmore dropped 4 per cent to 318p after the UK fund manager focusing on emerging markets said assets under management fell 10.5 per cent to $58.9 billion.

Man declined 4 per cent to 150p, the lowest level since 2001.

Mitchells and Butlers tumbled 6.9 per cent to 235.1p after Piedmont said it will not proceed with an offer for the pub company.

Hargreaves Lansdown surged 3.9 per cent to 500p after the retail broker reported a 27 per cent gain in revenue in the first quarter. – (Bloomberg)