LONDON (ShareCast) - Markets suffered another heavy sell-off on Monday, sending the FTSE 100 to levels not seen since the start of the year, as concerns over a slowdown in China and last week’s Federal Reserve policy meeting continuing to hit markets across the globe.

London’s FTSE 100 finished the day down 87 points, falling 1.4% to 6,029. After the strong gains seen early on in the year – which sent the Footsie to a 13-year high of 6,840.27 on May 22nd – fears of an impending ‘tapering’ of stimulus in the US have sparked massive share-price declines worldwide over the last month.

These fears were compounded last week after Fed Chairman Ben Bernanke indicated that the central bank could soon start to scale back quantitative easing (QE) if economic data continues to improve. The looming withdrawal of liquidity means the UK index has now nearly erased all of its year-to-date gains and stands at an early-January low.

“With little on the economic agenda, investors were left wondering if the Fed could bring its tapering forward if we see a strong upswing in the US economic data in the weeks ahead,” said Market Strategist Ishaq Siddiqi from ETX Capital.

Market were also digesting the news that Goldman Sachs has joined a growing list of brokers to cut its growth forecasts for China for this year and the next, owing to tighter financial conditions and reforms. The investment bank now expects China to grow by only 7.4% in 2013 compared to the previous 7.8% estimate. For 2014, Goldman now anticipates a 7.7% expansion compared to the prior 8.4% forecast.

A good entry level?

In spite of the continuing bearish mood, it could be a good time for bargain hunters to step in, recommended one analyst today. “The severity of the fall has been brutal but there should be support at the 6,000 level and is a good long-term entry level for those taking a medium- to long-term outlook,’ said Ronnie Chopra, Head of Strategy at Tradenext.

While he warned about volatility ahead given growing concerns over China, higher bond yields and the end of QE in the States, he highlighted that dividend yields have increased and stocks offering 5.0%-plus yields - such as Aviva, Vodafone and National Grid - could become more attractive.

Furthermore, he said: “With Sterling weak and forecast to fall further against the US dollar in the short-term, this should also benefit many FTSE 100 constituents that are multi-national and therefore receive much of their income in US dollars.”

FTSE 100: Miners fall on concerns over Chinese slowdown

Mining stocks were again bearing the brunt of the market-wide sell-off today on concerns over slowing growth in China. Vedanta, Glencore Xstrata and Anglo American were all registering moderate losses in afternoon trade, tracking commodities prices lower.

Rio Tinto, meanwhile underwhelmed with the decision to keep hold of its diamonds business, saying that market fundamentals remain robust with growing demand for luxury goods in Asia and continued strong demand in the US.

ENRC also finished lower receiving a downwardly revised takeover offer from its founding shareholders of around £3.0bn, under the previous £3.3bn proposal last month. Director Mohsen Khalil said that the board is “very disappointed by the value of the offer, which it believes materially undervalues ENRC, its fundamentals, the intrinsic value of its underlying assets and its growth prospects”.

Banking stocks were also under pressure this morning with Lloyds, Barclays, HSBC and StanChart trading in the red. RBS however was making gains after its rating was upgraded by Investec from 'sell' to 'hold'.

Defensives eked out gains today as risk appetite declined. Severn Trent, which was recently the target of a takeover bid from an international consortium, was performing well today, rebounding after a +20% fall over the last month following the withdrawal of an offer. Utilities peers United Utilities was also higher.

Vodafone finished in positive territory after confirming its intention to acquire Kabel Deutschland, Germany’s biggest cable company, for more than £8.5bn.

Supermarket peers Sainsbury and Morrison were under the weather today after Citigroup downgraded its ratings on the stocks to 'sell' and 'neutral', respectively. Tesco, which the broker already rates it as a 'sell', was also down.

FTSE 250: Essar narrows losses; Kazakhmys down after ENRC offer

Essar Energy’s shares rallied after the company narrowed its losses as revenues grew on the back of higher refining volumes at the energy company’s Refining and Marketing India business.

Man Group advanced as the company held an analyst presentation, with investors shrugging off the news that Odey Asset Management has cut its stake in the hedge fund after its recent share-price slump.

Gold miner Centamin plunged after Goldman Sachs cut its forecasts for the price of the yellow metal for this year and the next. Meanwhile, shares were also down in sympathy with sector-peer Newcrest Mining which is to take the biggest one-time writedown ($5.5bn) in gold-mining history.

Sector peer Kazakhmys, a 26% shareholder of ENRC, retreated after its management supported a takeover bid of the latter despite admitting that the offer undervalues the business.

FTSE 100 - Risers
United Utilities Group (UU.) 655.50p +1.00%
Severn Trent (SVT) 1,628.00p +0.87%
Aggreko (AGK) 1,643.00p +0.86%
G4S (GFS) 233.50p +0.65%
Serco Group (SRP) 587.50p +0.26%
Capita (CPI) 945.50p +0.21%
Vodafone Group (VOD) 175.90p +0.03%

FTSE 100 - Fallers
Vedanta Resources (VED) 1,026.00p -6.47%
Croda International (CRDA) 2,260.00p -4.80%
Glencore Xstrata (GLEN) 273.45p -4.70%
Aberdeen Asset Management (ADN) 348.90p -4.20%
Anglo American (AAL) 1,297.50p -4.03%
ITV (ITV) 131.90p -4.00%
Rolls-Royce Holdings (RR.) 1,113.00p -3.64%
Travis Perkins (TPK) 1,410.00p -3.62%
Rio Tinto (RIO) 2,582.00p -3.44%
Hammerson (HMSO) 471.10p -3.26%

FTSE 250 - Risers
Spirent Communications (SPT) 140.00p +3.47%
Man Group (EMG) 81.05p +2.86%
Kenmare Resources (KMR) 24.97p +2.76%
Anite (AIE) 133.30p +2.70%
Essar Energy (ESSR) 122.00p +2.52%
BBA Aviation (BBA) 285.00p +1.86%
Synergy Health (SYR) 1,148.00p +1.59%
Computacenter (CCC) 415.00p +1.47%
Interserve (IRV) 490.80p +1.38%
Betfair Group (BET) 830.00p +1.22%

FTSE 250 - Fallers
Centamin (DI) (CEY) 30.88p -13.28%
Kazakhmys (KAZ) 233.70p -13.25%
Dixons Retail (DXNS) 38.10p -11.02%
African Barrick Gold (ABG) 112.30p -7.34%
Ashtead Group (AHT) 598.00p -7.07%
Salamander Energy (SMDR) 144.80p -6.76%
Thomas Cook Group (TCG) 113.00p -6.61%
Ferrexpo (FXPO) 134.70p -6.59%
Dechra Pharmaceuticals (DPH) 707.00p -6.36%
Polymetal International (POLY) 493.30p -6.13%

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