A lot of buyers will be coming in to BHP at these levels, Obviously, the current issue is growth concerns from China and Europe. Without growth, risk assets, generally, struggle so we saw commodities come off quite a bit overnight."
Rio Tinto Group and BHP Billiton Ltd. (BHP) dropped more than 4 percent after executives from both companies warned of a slowdown in China and as copper inventories rose in Shanghai. Debenhams Plc (DEB) paced advancing shares after the retailer reported a pickup in sales growth.
“The Chinese government is trying to manufacture a moderate slowdown,” said Keith Bowman, an equity analyst at Hargreaves Lansdown Stockbrokers in London. “For the time being, investors will take that with a pinch of caution. News of rising fuel prices in China on the back of falling house prices may have damped investor sentiment.”
China, the world’s largest oil consumer after the U.S., yesterday increased gasoline and diesel prices for the second time in less than six weeks after crude last month gained the most in a year. Earlier this month the Chinese government cut its target for annual economic growth this year to 7.5 percent from a previous forecast of 8 percent.
Rio Tinto, the world’s third-largest mining company, dropped 4.2 percent to 3,464.5 pence as a gauge of U.K. metal producers lost 3.6 percent to below its 200-day moving average.
“The rate of GDP growth in China is more immediately slowing,” Rio’s David Joyce, managing director of expansion projects, said at a conference in Perth, Australia. “We remain confident on the basis of the figures we have seen, of a soft landing, with solid growth for this year.”
Larger rival BHP slid 4.1 percent to 1,965 pence after the company said China’s steel production is slowing as the country shifts its focus away from large building projects to consumers.
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