China-sensitive Burberry and miners weigh on FTSE

LONDON - FTSE slipped, as a landmark corporate bond default in China, the world's top metals consumer and a big luxury goods market, hit Burberry and mining stocks.

Investors were also avoiding placing big bets before US jobs data, due out at 1330 GMT, that may sway the near-term direction of the market.

The blue-chip FTSE 100 index was down by 0.2 per cent, or 3.34 points, at 6,777.01 points by 1157 GMT.

The FTSE 350 Mining Index fell 0.9 per cent, weighed down by a fall in the price of copper on concerns about slower economic growth in China.

Those concerns were compounded by an unprecedented Chinese domestic bond default after loss-making solar equipment producer Chaori Solar missed an interest payment.

Analysts said the landmark default was likely to force a re-pricing of credit risk in a market that has long assumed even high-yielding debt carried an implicit state guarantee.

Traders said the fall-out from these signs of possible strains in the Chinese economy was also affecting Burberry, for which China has been a major engine of growth.

"The China bond default is impacting companies exposed to that region, such as the miners and Burberry," Beaufort Securities chief investment strategist Mike Franklin said.


Uncertainty over how to interpret the US employment data, and tensions between Russia and Ukraine also weighed on global equity markets.

US hiring probably picked up enough in February to keep the Federal Reserve on track in terms of a reduction to its monetary stimulus programme, although the size of the gain is expected to be modest as the economy struggles to break from the grip of severe winter weather.

US non-farm payrolls data is seen as rising 149,000 last month, with the jobless rate holding at a five-year low of 6.6 per cent, according to a Reuters survey of economists.

JNF Capital trader Rick Jones said he would buy into the FTSE 100 if it fell to the 6,720-6,730 point level, given his expectations that the FTSE would rally later in the year to challenge record highs in the 6,900-7,000 point region.