U.K. Stocks Drop as Mining Shares Fall; Johnson Matthey Slides

By Sarah Jones

Sept. 14 (Bloomberg) -- U.K. stocks slid, led by Eurasian Natural Resources Corp. and Kazakhmys Plc as a measure of mining shares retreated from the steepest weekly advance since July.

ENRC, a producer of steelmaking raw materials in Kazakhstan, and Kazakhmys dropped more than 2.4 percent as base metals retreated. Johnson Matthey Plc lost 3.9 percent as Morgan Stanley downgraded the shares.

The benchmark FTSE 100 Index slipped 30.54, or 0.6 percent, to 4,980.93 at 8:47 a.m. in London. The FTSE All-Share Index sank 0.6 percent and Ireland’s ISEQ Index lost 0.2 percent.

The FTSE 100 has rebounded 42 percent since its March low, pushing the measure’s valuation to about 76 times its companies’ reported earnings, the most expensive level in seven years, according to weekly data compiled by Bloomberg.

ENRC dropped 3.8 percent to 837 pence as the FTSE 350 Mining Index retreated 2.1 percent. The measure last week rallied 7.4 percent, the biggest five-day advance since July 24.

Kazakhmys declined 2.4 percent to 1,070 pence and Xstrata Plc dropped 1 percent to 915.5 pence as metals including copper, nickel and tin retreated on the London Metal Exchange.

Copper tumbled by the exchange-imposed 5 percent daily limit in Shanghai as expanding inventories and growing production in China fueled concern that supply will outpace demand.

Johnson Matthey dropped 3.9 percent to 1,390 pence after Morgan Stanley downgraded the producer of a third of all autocatalysts to “equal weight” from “overnight.”

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.