Market Watch
Miners hurt in London after weak China data
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — U.K. stocks were hit hard on Thursday, as mining firms dropped after weak factory data from China and banks declined on a report the sector needs to plug a multibillion-pound capital shortfall.
China is facing a slowdown as a gauge of manufacturing health hit a nine-month low and as banks become more cautious about lending. The WSJ’s Tom Orlik tells Michael Arnold what the government needs to do to stimulate growth.
Miners posted the biggest losses in the index after a disappointing update on China’s manufacturing sector ignited fears of slower growth in the country. The “flash” version of HSBC manufacturing Purchasing Managers’ Index fell to a nine-month low of 48.3, down from May’s final reading of 49.2. A reading below 50 indicates contraction.
“The implication is that Q2 growth in the economy at large is likely to have weakened further from Q1, given that the average of this index stands at 49.3 in Q2, compared with 51.5 in Q1,” said Klaus Baader, economist at Société Générale, in a note.
China is a major user of natural resources and any signs of a slowdown in the economy tend to weigh on miners.
