FTSE lower on further signs of Chinese slowdown

Shares staged a small bounce in opening deals but turned lower again as more disappointing data from China dragged miners lower.

The FTSE 100 fell back 16 points, or 0.32%, lower to 4822 and the mid-cap FTSE 250 was 27 points, or 0.30%, lower at 9249.

Last week, the FTSE 100 lost 4.1% and the FTSE 250 fell 3.4%.

China's Shanghai Composite fell close to a 16 month low after disappointing car sales data overnight added to concerns about the potential impact of stimulus withdrawal there. 

The main US share index the DJIA fell 46.05 points, or 0.47%, to 9686 on Friday after a mixed jobs report added to concerns about the pace of the recovery in the world's largest economy.

With the US markets closed for Independence Day today and little economic news due investors are preparing nervously for Thursday's rate decisions from the Bank of England and the European Central Bank.

One London trader said: 'The economic focus will likely be on the ECB's and BOE's interest rate decision on Thursday.  President Claude Trichet's press conference post the ECB meeting is worth watching as we suspect there could be few questions about the European bank stress tests.'

Over the weekend French economy minister Christine Lagarde told reporters the stress tests for banks in the euro-zone will be published on July 23rd. She said: 'you will see that banks in Europe are solid and healthy.'

Gary Jenkins, head of fixed income at Evolution, said: 'Details of the stress tests have been given to banks subject to the tests, but have not been made public. Unless there is transparency over the criteria and these are seen to be realistic, it is difficult to believe that markets will be reassured by banks passing the tests.'

Others believe a number of European banks will have to raise more capital after the tests but levels of cash needed should be manageable.

In UK company news, BP topped the riser board after weekend reports the oil giant is looking to secure Middle Eastern funding to help defend the troubled group from takeover.

The company is in talks over a Barclays-style rescue by investors from Abu Dhabi and Qatar.