Midday tumble for FTSE as China raises rates

A fairly solid performance for London stocks today was undermined by news from China that the world's largest developing economy is putting up its interest rates. Mining stocks retreated substantially which dragged down the FTSE 100 index. After tumbling 0.79 per cent from its peak of 5,762 the FTSE is trading at 5,723 at 13:25 BST, 0.35 per cent lower than yesterday's close.

Chris Bradshaw
shareprices.com - Tuesday, October 19, 2010

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Through this morning banks FTSE 100 stocks performed relatively well with banks leading the pack. Autonomy Corporation is still at the top of today's leader board, up 2.96 per cent. The software company turned back from previous operating losses and investors are encouraged that some of the weak results for Q3 2010 could be explained by contracts of which the signing was delayed into Q4.

However chipmaker ARM Holdings slipped as Apple reported that sales of its iPad was lower than expected, the iPad makes use of ARM chips. ARM Holdings is down 2.46 per cent.

Investors are losing interest in mining stocks as fears emerge that China's rapid rate of growth may slow down somewhat due to the interest rate hike. Miners benefit substantially from the strong demand for resources from China's booming economy. Fresnillo, Vedanta Resources, Rio Tinto, Lonmin and African Barrick Gold all lost over 1.8 per cent.

FTSE 250 stocks experienced a similar dip at midday but managed to recover to parity with yesterday's closing. Resource stocks were again the major losers but Kenmore Resources managed to shoot up by 6.10 per cent.

 

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