By Carla Mozee, MarketWatch
LONDON (MarketWatch) -- U.K. stocks tumbled Tuesday, with fears
that China will cut its growth forecast hitting shares of commodity
producers.
Among them, Tesco PLC shares sank after the supermarket company
issued a new profit warning.
The FTSE 100 fell 1% 6,607.47, with no sectors trading
higher.
Ahead of the open of European trade, Chinese state media
reported that the government might cut its 2015 growth target to as
low at 7%, down from the 2014 goal of about 7.5%. China's top
leadership is meeting for the annual Central Economic Work
Conference in Beijing. Chinese stocks, which have been soaring
recently, dropped sharply, leaving the Shanghai Composite down more
than 5%.
In the mining group, shares of BHP Billiton PLC lost 2.4%, and
Rio Tinto PLC fell 2.3%. Among energy issues, Tullow Oil PLC
declined 3.7% and oil-services company Petrofac fell 3.4%. Oil
prices (CLF5) remained under pressure, trading at five-year
lows.
"Unless investors close [U.S. dollar] positions in the run up to
Christmas, or the [People's Bank of China] add further stimulus to
its economy in the coming weeks, it appears unlikely the oil
markets will enter a correction period anytime soon," said Jameel
Ahmad, chief market analyst at FXTM, in a note Tuesday.
Tesco shares sank 15% to their lowest level since February 2000,
as the supermarket company cut its full-year profit forecast,
citing investments it's making in its business as it battles rival
chains. Group trading profit will not exceed 1.4 billion pounds
($2.2 billion), said Tesco, which compares with analysts'
expectations of GBP1.94 billion.
"If there had been hope that the market would be immune to yet
another profit warning, this quickly evaporated as Tesco has
provided profit guidance which is nearly 30% shy of an already
lowered estimate," said Richard Hunter, head of equities at
Hargreaves Lansdown Stockbrokers, in a note.
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