Miners bear brunt as FTSE falls below 5,200

The FTSE 100 fell below the 5,200 mark on Tuesday morning, taking its cue from declining US markets.

Wall Street fell for a third day on Monday as concerns the economy may return to recession overshadowed optimism over deal activity including Hewlett-Packard’s bid for 3Par.

In the UK, miners led the lead blue chip index lower, with Vedanta Resources bearing the brunt of the selling, 5.69% lower at £19.21. India's environment minister said that the federal government had rejected Vedanta’'s proposal to mine the Niyamgiri Hills for bauxite and was considering penal action against the company.

ENRC, Kazakhmys and Xstrata followed in Vedanta’s trail, dropping to 816p, £11.04 and 988.5p respectively.

Other big losers included Wolseley, the trade distributor of plumbing and heating products, which announced that it was selling tool and equipment hire business Brandon Hire Ltd to Rutland Partners. Further disposals are expected in the future.

WPP, the advertising giant led by Sir Martin Sorrell, was nearly 5% lower at £12.41. Although it had reported a 36% rise in pre-tax profits to £244 million, the figure missed forecasts.

The only economic data in the UK came from the British Bankers’ Association which reported annual growth in the banks’ net mortgage lending of 4.1%, ahead of the 0.9% for the whole mortgage market in June. The association however warned that demand for mortgages remained subdued.

In the US, a home sales report due later today is expected to provide more evidence that growth in the world’s largest economy is faltering. Economists surveyed by Bloomberg predict new-home sales in the US stayed at the second-lowest level on record last month.