U.K. Stocks Fall; Mining Companies Retreat on China Concerns

By Sarah Jones

Jan. 20 (Bloomberg) -- U.K. stocks declined for the first time in three days, as mining companies tumbled by the most in almost two months amid speculation China may rein in stimulus measures.

Xstrata Plc, the world’s fourth-largest copper producer, Antofagasta Plc and Rio Tinto Group all dropped more than 2 percent as copper fell in London. Johnson Matthey Plc lost 2.3 percent as Credit Suisse Group AG downgraded the shares, citing valuations.

The benchmark FTSE 100 Index retreated 17.38, or 0.3 percent, to 5,495.76 at 11:08 a.m. in London, trimming this year’s advance to 1.6 percent. The FTSE All-Share Index slid 0.3 percent today, as did Ireland’s ISEQ Index.

Stocks fell with commodity prices after the Chinese Chief banking regulator, Liu Mingkang, said in an interview today that some banks have been asked to limit lending after they failed to meet certain requirements.

“The move could lead to more widespread tightening by the Chinese central bank as they try and cool off an overheating economy,” said London-based Nick Serff, a market analyst at City Index.

Premier Wen Jiabao yesterday said China will manage the pace of credit growth. Last year, the third-largest economy expanded an estimated 8.5 percent, helping to drag the world from the worst recession since World War II.

A measure of mining shares dropped 3 percent, the steepest decline since Nov. 26 as copper retreated on concern about demand in China, the largest user of the metal. Lead, nickel, tin and zinc also retreated on the London Metal Exchange.

Miners Fall

Shares of Xstrata dropped 3.5 percent to 1,175 pence, while Antofagasta, owner of copper mines in Chile, declined 3.8 percent to 1,000 pence. Rio Tinto, the world’s third-biggest mining company, lost 2.8 percent to 3,521 pence.

Johnson Matthey slid 2.3 percent to 1,599 pence after Credit Suisse downgraded the producer of autocatalysts to “underperform” from “neutral.

London-based analyst Rhian Tucker said the shares “remained expensive” and the company would “benefit the least from an economic bounce back.”

The following stocks also rose or fell in the U.K. market. Symbols are in parentheses.

Kesa Electricals Plc (KESA LN) retreated 5.5 pence, or 3.8 percent, to 140.2. Europe’s third-largest electronics retailer said revenue at stores open at least a year fell as its Comet stores failed to repeat last year’s Christmas performance. Overall sales in the 10 weeks to Jan. 8 at stores open at least a year before currency gains slipped 0.3 percent.

Soco International Plc (SIA LN) dropped 46 pence, or 3.1 percent, to 1,421 after the company announced plans to sell up to 7.2 million new shares to fund a development program in Vietnam in the next year.

William Hill Plc (WMH LN) rallied 12.1 pence, or 6.5 percent, to 197.7 after the U.K.’s second-largest bookmaker reported a 6 percent rise in fourth-quarter revenue. The company also said Chairman, Charles Scott, will stand down by the end of 2010.

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