Fears of global slowdown send miners into the pits

Shares in mining giant Anglo American slumped to their lowest ever level after another bout of disappointing Chinese data prompted Asian stocks to plunge, in scenes reminiscent of the rout in August.

Miners became the FTSE’s biggest casualties yesterday after China’s industrial profits fell 4.6pc in October – its fifth consecutive month of declines – sparking renewed fears the world’s second largest economy is contracting.

Anglo’s announcement that it plans to close its Drayton coal mine in Australia next year also hurt the FTSE 100 stock. The decision came after a state panel recommended the Australian government should block an expansion of the mine as it would spoil the region.

The stock’s performance was little helped by news that non-executive director Phuthuma Nhleko would step down from the board immediately. HSBC downgraded the stock earlier this week as it urged Anglo to cut its dividend.

Ahead of the company’s investor day on December 8, analysts warned investors that Anglo would spend at least $2.7bn (£1.8bn) if it were to maintain its dividend – scrapping it would save the miner around $1.1bn a year.

Anglo was not the only miner under pressure to reassess its dividend policy. On Thursday, JP Morgan Cazenove called on BHP Billiton to slash its progressive dividend by 50pc after the Samarco dam disaster. Shares in Anglo American dived 35.7p, or 8.2pc, to 400.2p, BHP Billiton fell 3.1pc to 807.6p, Glencore was 4.2pc lower at 91.9p and Antofagasta tumbled 4pc to 496.7p.

Gold miners were also in the red after the precious metal slumped to a near six-year low, weakened by a strong dollar and a potential interest rate hike by the US Federal Reserve next month. Fresnillo was 4.5pc lower at 715p, while Randgold Resources shed 4.3pc to finish at £39.97.

^{Gold spot price one-day graph (Source: Bloomberg)}

On the wider market, China’s woes dragged the mining-heavy FTSE 100 into negative territory. The blue-chip index closed down 17.98 points, or 0.28pc, to 6,375.15.

The move by China’s stock regulator to widen its probe on brokerages also dented investor sentiment towards UK-listed trusts. Fidelity China lost 1.4pc to 136.5p, while Genesis EM Fund and JP Morgan Emerging Markets tumbled 1.8pc and 1.3pc respectively.

• Chinese stocks plunge as regulators widen probe into market

Elsewhere, Inmarsat jumped 25p, or 2.3pc to £11.13 after HSBC raised its target price amid expectations of new contracts. HSBC’s Olivier Moral said: “We expect news flow on new contracts to be solid, especially new contracts with airlines across Europe.”

Finally, utility group Pennon was among the biggest mid-cap risers – up 5.5pc to 883p – after its half-year pre-tax profits jumped 6.8pc to £106.8m, buoyed by a robust performance in its water business. Morgan Stanley said the division would “deliver materially more outperformance than its peers”.