UK shares slide on China growth concerns, geopolitical tension

Mon Mar 24, 2014 12:44pm EDT

* FTSE 100 index closes 0.6 percent lower

* Charts signal further weakness in near term

* Miners under pressure due to China growth worries

By Atul Prakash

LONDON, March 24 (Reuters) - Britain's top share index fell on Monday on concerns about the situation in Ukraine and a slowdown in Chinese growth, while energy providers were hit by worries they may be forced to break up their businesses.

The blue-chip FTSE 100 index ended 0.6 percent lower at 6,520.39 points, falling for nine of the past 12 trading sessions. It has lost more than 4 percent this month.

Analysts said that overall sentiment remained fragile due to Chinese growth concerns and tensions in Ukraine. U.S. President Barack Obama began crisis talks with his European allies after Ukraine announced the evacuation of its troops from Crimea, effectively yielding the region to Russia.

"It's all about Russia right now," said Marc Kimsey, senior Trader at Accendo Markets. "The growing risk of conflict cannot be ignored and an increasing military presence on the Russia-Ukraine border contradicts (Russian President Vladimir) Putin's comments of Russia being satisfied with Crimea's acquisition."

Mining shares came under pressure on the prospect of slower growth in China after a lower-than-expected Chinese purchasing managers index. Miners Rio Tinto, Randgold Resources , Antofagasta and BHP Billiton were down 0.5 to 4.2 percent.

"Some caution is still required given concerns about a growth slowdown in China and what's going on in Ukraine," Keith Bowman, equity analyst at Hargreaves Lansdown, said.

"We are seeing signs of a slowing Chinese economy. But weaker economic indicators also raise hopes that the authorities will take further action to help stimulate growth. That explains why losses in mining stocks are limited today."

Energy firms fell on concerns of a break-up. SSE and Centrica dropped 2.3 percent and 1.9 percent respectively after the Sunday Times said the Competition and Markets Authority could force big energy firms to separate their power-generation and retail arms.

"A break-up of generation and retail wouldn't do anything (to gas prices) but increase the cost of operations," Ingo Becker, an analyst at Kepler Chreuvreux, said.

Gloomy market sentiment was reflected in charts, which indicated that the FTSE 100 index could face further selling pressure after falling below its 200-day moving average last week.

"The technical picture does suggest that the FTSE might not be finished with its test of support and that we could soon be seeing a further exploration of the recent lows, at 6,492, which could lead to a test of the bottom created last month at 6,449," Bill McNamara, technical analyst at Charles Stanley, said.

"In short, we're not out of the woods yet."

Among other movers, plumbing supplies group Wolseley , fell 2.6 percent on caution ahead of its results on Tuesday, with investor focus shifting to margins at its U.S. business and its outlook on 2014 profitability.

International Consolidated Airlines Group, which owns British Airways and Iberia, dropped 2.3 percent after Morgan Stanley removed it from its "Europe Best Ideas" list and said it preferred low-cost carriers as they had scope to outperform. (Additional reporting by Francesco Canepa; Editing by Susan Fenton)

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