* FTSE 100 down 0.9 pct, miners slip 2.4 pct
* GKN falls, traders cite GKN warning on currency movements
* FTSE currently in technically "overbought" territory
By Atul Prakash
LONDON, Feb 25 Mining shares extended losses to
post their biggest one-day slide in six months on Tuesday as
concern persisted that slower economic growth in China and
lending curbs on the property sector there would hurt demand for
The UK mining index fell 2.4 percent, the
biggest sectoral decliner, dragged down by major mining
companies such as Rio Tinto, BHP Billiton and
Anglo American, which fell 2-3.2 percent.
The index lost one percent on Monday and 4.6 percent in less
than a week on concern over banks in China, the world's top
metals consumer, tightening loans to property developers and
other sectors such as steel, cement and construction.
"China is absolutely crucial to marginal demand for
industrial metals and there is no doubt that recent
macro-economic concerns in China are playing a role in the
sector's underperformance," Macquarie strategist Daniel
"But I would probably use the recent pullback as an
opportunity to accumulate mining stocks. The earnings momentum
has turned, the sector is cheap and is pricing in a weakness in
commodity prices. It's a sector that investors have been away
from, but are increasingly looking at it now. So it could
benefit from fund flows also," he said.
Weaker miners put pressure on the blue-chip FTSE 100 index
, which snapped a seven-session winning run and slipped
from a one-month high. The benchmark index, which climbed 0.4
percent on Monday, was down 0.9 percent at 6,806.14 points by
1144 GMT. The UK banking index fell 1.4 percent.
Traders said the FTSE 100, which came within striking
distance of its record high scaled 14 years ago this week, also
witnessed a technical sell-off.
"Many stocks have become overbought and it's not hard to
argue that now is a good time to take some profit. These major
resistance areas are rarely overcome at the first attempt and
some consolidation would not be a bad thing in the short term,"
Bill McNamara, technical analyst at Charles Stanley, said.
The FTSE 100 has a relative strength indicator (RSI) reading
on a nine-day basis of about 70. If a market has an RSI above
70, it indicates it is technically "overbought" and often
results in a pullback.
"There are a few exhaustion signals going on, and the RSI
looks overbought. It doesn't mean we won't get to that all-time
high, but we might just need a bit of consolidation first,"
Hantec Markets analyst Richard Perry said.
Among sharp movers, GKN fell 2.7 percent, with
trading volume at more than double its average 90-day volume -
above those for the FTSE where volume only stood at 33 percent.
Although GKN posted a rise in annual profits and forecast
continued growth this year, it unnerved some investors by
warning on the possible effects of adverse currency movements.