By Carla Mozee, MarketWatch
U.K. stocks dropped Friday, hit alongside other global markets
as investors responded to rule changes for Chinese stocks.
The FTSE 100 fell 0.8% to 7,003.68. All sectors were showing
losses, led by a 1.5% decline for shares of miners, whose
businesses are sensitive to the China, a key buyer of metals and
other commodities. Shares of Rio Tinto PLC reversed gains and fell
1.3% and BHP Billiton PLC (RIO) (BHP) gave up 1.6%.
European equities and U.S. stock futures tumbled to intraday
lows as a Hong Kong futures index tied to Chinese stocks tumbled in
after-hours trade. The drops came after the Securities Association
of China said fund managers may lend shares for short selling
(http://www.marketwatch.com/story/china-regulators-to-allow-short-selling-by-fund-managers-2015-04-17),
and will also expand the number of stocks investors can short
sell.
At the same time on Friday, the China Securities Regulatory
Commission "banned the margin trading business of brokerages from
taking part in umbrella trusts," Bloomberg News reported.
As for the ban,"any sort of regulation for the market,
particularly one that so buoyant like that in China, is never seen
as a good thing as it's literally a physical impact on the kind of
trading that can be done. The actual trading itself is getting
limited, potentially," said Jasper Lawler, market analyst at CMC
Markets.
The moves in China come as Chinese stocks have zoomed higher
this year
(http://www.marketwatch.com/story/china-shares-rise-as-investors-hunt-large-caps-2015-04-17).
The Shanghai Composite is up 32%, and Hong Kong Hang Seng Index has
gained 17% year-to-date.
U.K. stocks had been marginally lower before losses in global
markets accelerated.
The FTSE 100 was facing a weekly decline of 1.3%. But during the
week, the benchmark closed at a record 7,096.78. Analysts have said
U.K. stocks have been a beneficiary of the European Central Bank's
massive bond-buying program launched last month.
Lawler said the FTSE 100's rise above 7,000 has been supported
by concerns about slowing in China. "All this weak data from China
just means that further [monetary] easing from the Chinese
government is almost inevitable. That should be good if that
positively reflects on demand from China," for products from mining
companies.
Rio Tinto and BHP Billiton are the largest producers of iron
ore.
Only three shares were moving higher on the FTSE 100 during
afternoon trade. Oil major BP PLC was up 0.6%. Water company Severn
Trent PLC gained 0.5% and Whitbread PLC rose 0.1%. Whitbread is
behind the Costa Coffee and Premier Inn hotel chains.
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