By Carla Mozee, MarketWatch

U.K. stocks dropped Friday, hit alongside other global markets as investors responded to rule changes for Chinese stocks.

The FTSE 100 fell 0.8% to 7,003.68. All sectors were showing losses, led by a 1.5% decline for shares of miners, whose businesses are sensitive to China, a key buyer of metals and other commodities. Shares of Rio Tinto PLC reversed gains and fell 1.3% and BHP Billiton PLC (RIO) (BHP) gave up 1.6%.

European equities and U.S. stock futures tumbled to intraday lows as a Hong Kong futures index tied to Chinese stocks tumbled in after-hours trade. The drops came after the Securities Association of China said fund managers may lend shares for short selling (http://www.marketwatch.com/story/china-regulators-to-allow-short-selling-by-fund-managers-2015-04-17), and will also expand the number of stocks investors can short sell.

At the same time on Friday, the China Securities Regulatory Commission "banned the margin trading business of brokerages from taking part in umbrella trusts," Bloomberg News reported.

As for the ban,"any sort of regulation for the market, particularly one that so buoyant like that in China, is never seen as a good thing as it's literally a physical impact on the kind of trading that can be done. The actual trading itself is getting limited, potentially," said Jasper Lawler, market analyst at CMC Markets.

The moves in China come as Chinese stocks have zoomed higher this year (http://www.marketwatch.com/story/china-shares-rise-as-investors-hunt-large-caps-2015-04-17). The Shanghai Composite is up 32%, and Hong Kong Hang Seng Index has gained 17% year-to-date.

U.K. stocks had been marginally lower before losses in global markets accelerated.

The FTSE 100 was facing a weekly decline of 1.3%. But during the week, the benchmark closed at a record 7,096.78. Analysts have said U.K. stocks have been a beneficiary of the European Central Bank's massive bond-buying program launched last month.

Lawler said the FTSE 100's rise above 7,000 has been supported by concerns about slowing in China. "All this weak data from China just means that further [monetary] easing from the Chinese government is almost inevitable. That should be good if that positively reflects on demand from China," for products from mining companies.

Rio Tinto and BHP Billiton are the largest producers of iron ore.

Only three shares were moving higher on the FTSE 100 during afternoon trade. Oil major BP PLC was up 0.6%. Water company Severn Trent PLC gained 0.5% and Whitbread PLC rose 0.1%. Whitbread is behind the Costa Coffee and Premier Inn hotel chains.

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