By Sara Sjolin
LONDON (MarketWatch) -- Mining firms added pressure on the
U.K.'s benchmark stock index on Tuesday, after data from China
showed growth in the services sector eased in September. Banks and
oil firms were also among notable decliners.
The FTSE 100 index lost 1.1% to 6,365.83, closing at the lowest
level since early July.
The losses came even as the International Monetary Fund raised
its forecast for economic growth in the U.K. and now expects the
economy to expand 1.4% in 2013, up from an earlier forecast of 0.9%
published in July.
The negative sentiment was partly spurred by data from China,
showing HSBC China Services Purchasing Managers' Index fell to 52.4
in September from 52.8 in August, indicating that growth in the
services sector is slowing down. A reading above 50 indicates
expansion.
Miners declined after the data, as they are sensitive to growth
indications from China because the country is major user of natural
resources.
Shares of BHP Billiton PLC (BHP) lost 1.9%, Glencore Xstrata PLC
(GLCNF) dropped 1.3%, Rio Tinto PLC (RIO) gave up 0.8%, and Anglo
American PLC fell 1.5%. Metals prices were mixed.
Oil firms were also lower, with shares of BP PLC (BP) down 1.1%,
and Royal Dutch Shell PLC (RDSB) 1% lower.
Most retailers declined after the British Retail Consortium said
same-store sales in the U.K. rose 0.7% in September year-over-year,
below the 1.5% recorded in September last year and lower than the
consensus estimate of 2%, according to FactSet.
Shares of Marks & Spencer Group PLC lost 3.4%, Next PLC gave
up 1.5%, and Kingfisher PLC erased 1.9%.
Uncertainty over the budget impasse in the U.S. added to the
negative mood in London. The government has been shut down since
Oct. 1 as lawmakers have failed to agree on funding for the new
fiscal year. Additional worries about the looming debt ceiling in
mid-October have also weighed on the investing mood in recent
days.
House Speaker John Boehner said Tuesday that President Barack
Obama and Democrats need to negotiate over the two issues. "I'm not
drawing any lines in the sand," he said in response to whether he
wanted a specific amount of debt reduction.
Banks were on the decline. Shares of Lloyds Banking Group PLC
(LYG) gave up 2.4%, Barclays PLC fell 1.6% and Royal Bank of
Scotland Group PLC (RBS) lost 0.6%.
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