* FTSE 100 index ends flat after choppy trading
* Miners under pressure on China growth concerns
* RSA up on expectations of averting more writedowns
By Atul Prakash
LONDON, Jan 6 London-listed mining equities fell
on Monday as new signs of economic weakness in China, the
world's top metals consumer, prompted investors to dump
resources shares at the start of the first full week of 2014.
The UK mining index fell 1.9 percent, the
biggest one-day drop in more than a month, after surveys showed
growth in Chinese service sector activity slowed in December,
mirroring the trend seen in manufacturing.
"China is slowing down, particularly on the construction and
manufacturing side, and that could have a negative impact on the
commodity space as China is a huge driver of commodities
demand," Macquarie strategist Daniel McCormack said. "If we do
see a major slowdown in the country, then it would be difficult
for the mining sector to do well ... In the near term, I would
like to be positioned in industrials and techs and be cautious
Miner Fresnillo fell 4.7 percent to be the worst
performer on the FTSE 100 index, Antofagasta
declined 4.1 percent, and heavyweight Rio Tinto dropped
3.1 percent after the China data.
"China and its demand for commodities remains important for
the mining sector. The services PMI reading supports other
recent indicators pointing towards some possible slowing in
economic growth in the country," said Keith Bowman, equity
analyst at Hargreaves Lansdown.
However, the blue-chip FTSE 100 index closed flat at
6,730.73 points after a choppy trade, moving in and out of
positive territory several times during the day.
Losses in mining stocks were offset by stronger financials,
with RSA Insurance gaining 6.2 percent after the Sunday
Telegraph newspaper said a probe into its Irish business was
likely to conclude that accounting problems were an isolated
incident and no more writedowns would be needed.
Some other insurers and banks, generally seen as cyclical
stocks, were also in demand on expectations that improving
economic outlooks in Europe and the United States would prove to
be positive for the sectors.
Insurer Legal & General gained 1.5 percent, while
banks Barclays and HSBC rose 1.7 percent and
0.5 percent respectively. The UK banking index was
0.6 percent stronger, the top sectoral gainer.
"The banking sector is clearly exposed to the improvement in
economic conditions we are seeing in the UK. The sector is
showing good earnings momentum as well," said Robert Parkes,
equity strategist at HSBC Securities.
Analysts remained positive on the stock market's outlook in
the longer term. Morgan Stanley analysts predicted the FTSE 100
index would rise to a record high of 7,220 points in the next 12
months, a gain of 7 percent from current levels.