Mining firms drag the FTSE down as commodity prices drop

Commodity prices tumbled this morning, dragging miners and oil firms down and causing Britain's blue-chip index to dip.

Metals including copper, nickel, zinc and aluminium came under pressure as concerns mounted over weaker economic data in China.

Chinese industrial production fell to 6.2 per cent in October, missing estimates of 6.3 per cent growth and down on September's 6.6 per cent. Slower retail sales and fixed-asset investment growth were also cause for concern.

Read more: China’s paradoxical growth plan is still attractive for global funds

"Traders are concerned that China’s economy is slowing down, and will therefore won’t be as mineral hungry as they once were. This is putting pressure mining companies like Anglo American, Rio Tinto, BHP Billiton and Vedanta Resources," said David Madden, market analyst at CMC Markets UK.

Glencore's shares fell as much as 3.3 per cent and Anglo American dropped 2.65 per cent while BHP Billiton and Rio Tinto were both around two per cent down at the time of writing.

On the FTSE 250 index, shares in Ferrexpo and Vedanta Resources were both down more than three per cent.

"Such news is concerning for speculators and will likely continue price volatility in the short term, but we do not see this as fundamentally negative or against our current commodity price outlook," analysts at Investec reassured.

Read more: Revealed: The most-traded investments in July

Oil prices continue lower

Following a drop in oil prices yesterday after the International Energy Agency (IEA) lowered its oil demand forecast slightly, the black stuff edged lower still today.

Brent crude oil traded 1.22 per cent lower at $61.45 per barrel while US benchmark West Texas Intermediate prices fell 1.2 per cent to $55.03 per barrel.

"Besides casting doubts about the perceived tightening in the oil markets, the IEA also warned of a gloomy outlook for the commodity in 2017 – 2018," said Mihir Kapadia, chief executive and founder of Sun Global Investments.

"The current price fall means that crude prices have lost 5 per cent since hitting the 2015 highs early last week.”

Read more: A new dawn? Global oil rig count set to pass pre-crisis levels

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