Fall in mining stocks pushes UK's FTSE lower

Fri Mar 7, 2014 10:26am EST

* FTSE 100 down 0.6 pct in late session trading

* Chinese company's bond default hurts miners

* Tensions over Crimea also weigh on UK stock market

By Sudip Kar-Gupta

LONDON, March 7 (Reuters) - Britain's main share index fell on Friday as a landmark corporate bond default in China, the world's top metals consumer, hit miners, while lingering concerns about the crisis in Ukraine also weighed on the market.

The blue-chip FTSE 100 index briefly edged into positive territory after stronger-than-expected U.S jobs data, but then fell back and was down by 0.6 percent, or 38.83 points, at 6,749.66 points in late trade.

Traders also pointed to new signs of tension between the United States and Russia, after Russia's effective seizure of Ukraine's Crimea peninsula, as further weighing on stock markets.

A U.S. warship passed through Turkey's Bosphorus straits on Friday on its way to the Black Sea, although the U.S. military described this as a "routine" deployment scheduled well before the crisis in Ukraine.

"The pressure is growing to the downside," said Hantec Markets analyst Richard Perry, forecasting the FTSE could fall below 6,700 points in coming sessions.

The FTSE 350 Mining Index fell 3.4 percent, weighed down by a drop in the price of copper on concerns about slower economic growth in China.

Those concerns were compounded by an unprecedented Chinese domestic bond default after loss-making solar equipment producer Chaori Solar missed an interest payment.

Analysts said the landmark default was likely to force a re-pricing of credit risk in a market that has long assumed even high-yielding debt carried an implicit state guarantee.

JNF Capital trader Rick Jones said he would buy into the FTSE if it fell to 6,720-6,730 points, as he expects the market to rally later in the year and challenge record highs in the 6,900-7,000 points region, as the UK economy continues to recover.