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FTSE 100 to extend losses on reports from China, commodities fall

The markets are set to slide yet again with the FTSE 100 seen some 40 points or roughly 0.8% lower today after China further tightened its monetary policy with the central bank hiking reserve ratios for several large banks and telling them to curb lending.

The Dow Jones Industrial Average inched slightly higher, climbing 0.2%, the broader S&P 500 index added 0.45% and the technology heavy NASDAQ composite rose 0.25%.

Asian markets were weakened by the latest update from China. Hong Kong’s Hang Seng was down 2.1%, China’s Shanghai composite index was down 2.4%, Japan’s benchmark Nikkei 225 declined 1.8% to hit five week lows and South Korea’s KOSPI fell 2%.

The UK blue chip index lost 0.8% yesterday with miners leading the retreat as ENRC (LSE: ENRC), Rio Tinto (LSE: RIO), Xstrata (LSE: XTA) and Anglo American (LSE: AAL) all emerged among the heaviest fallers with losses of about 2%. However, it was hedge fund manager Man Group (LSE: EMG) that ended up at the bottom of the index, sliding 3%.

Insurer Legal & General (LSE: LGEN) emerged atop the leaderboard, climbing 3.7%. Sector peer RSA Insurance Group (LSE: RSA) and Royal Bank of Scotland (LSE: RBS) followed, adding 2%. Banks Barclays (LSE: BARC) and Standard Chartered (LSE: STAN) followed, climbing 1.7% and 1.2%, while commercial property company British Land (LSE: BLND) rose 1.5%.


Oil prices declined further as March Brent Crude was down to US$72.79/barrel, while US light, sweet crude declined to US$74.29/barrel.

Precious metals also retreated as gold slipped below US$1,100/oz again, while silver and platinum declined to US$16.97/oz and US$1,529/oz respectively.

Base metals followed with copper and nickel sliding to US$3.32/lb and US$8.11/lb, while zinc dropped to US$1.03/lb.

Investors will be looking to today’s preliminary reading of Q4 UK GDP with a revision to a 0.4% growth expected, signalling the end of the worst recession in more than 60 years.

Disclosure: The author holds no positions