The FTSE 100 Index shed almost 1% today after weaker metal prices caused a slump for shares in mining companies.
A boost for airline and travel stocks after Britain’s airspace reopened following the volcanic ash crisis also proved short-lived as the Footsie slipped 50.6 points to 5733.1.
The pressure in the mining sector came after traders continued to fret about demand prospects and heavyweight firm BHP Billiton disappointed analysts with its latest production figures, including a sharp fall in copper output in the three months to March.
BHP fell 49.5p to 2130.5p and Rio Tinto dropped 98p to 3700.5p, while Vedanta Resources fell more than 3% with a decline of 90p to 2657p.
Retailers also weighed on the index after Marks & Spencer shares were downgraded by Bank of America and investors worried that yesterday’s surprisingly large hike in inflation – to 3.4% in March – raised the risk of a move up in interest rates, which could hit consumers’ pockets.
“This could be equivalent to a circa 2% drag on general retail spending over a couple of years,” retail experts at Singer Capital Markets said.
M&S shares were down 9.3p to 378.3p, while Argos and Homebase owner Home Retail Group dropped 4.1p to 287.8p, a fall of more than 1%.
Elsewhere in the sector, shares in FTSE 250 Index listed Game Group slumped 12% after it posted a 27% fall in full-year profits and announced the departure of chief executive Lisa Morgan.
With trading conditions remaining tough, Game shares fell 12.5p to 88.75p and dragged rival HMV down by 3.6p to 81.35p.
Those turning ex-divi added to the pressure on London’s Footsie, led by BAE Systems, which fell 15.4p to 362p, or 4%.
Travel-related shares struggled to make headway despite the resumption of flying. BA lost an earlier gain to stand 0.8p lower at 233.1p, while easyJet was barely changed at 480.5p – a gain of 1p – and Thomson holidays parent TUI Travel nudged half a penny higher to 289.6p.
The biggest rise in the FTSE 100 Index came from chip designer ARM Holdings after strong results from technology giant Apple.
Cambridge-based ARM, whose chip designs are used in a raft of digital products such as mobile phone handsets and MP3 players, rose more than 3% – up 8p to 251.1p – after Apple shattered Wall Street hopes with second-quarter figures.