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 0.9% to 6,994.63. All sectors fell, 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 1.4%, and BHP Billiton PLC
(RIO) (BHP) gave up 1.6%.
European equities in late morning trade, along with U.S. stock
futures, sank as futures tied to Chinese stocks tumbled. 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's Hang Seng Index
has gained 17%.
U.K. stocks had been marginally lower before losses in global
markets accelerated.
The FTSE 100 posted a weekly decline of 1.3%. But during the
week, the benchmark closed at a record of 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 also been
supported by concerns about economic 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 nine shares closed higher on the FTSE 100 on Friday, led by
a 1.3% rise for oil major BP PLC .
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