Fall in mining stocks pushes UK's FTSE to 3-week low

* FTSE 100 ends down 1.1 pct at 6,712.67 points

* Chinese company’s bond default hurts miners

* Tensions over Crimea also weigh on UK stock market

* FTSE ends at 3-week closing low

By Sudip Kar-Gupta

LONDON, March 7 (Reuters) – Britain’s main share index fell to a three-week closing low on Friday as a landmark corporate bond default in China, the world’s top metals consumer, hit major mining stocks.

Lingering concerns about the crisis in Ukraine, after Russia’s effective seizure of Ukraine’s Crimea peninsula, also weighed on the market.

The blue-chip FTSE 100 index briefly edged into positive territory after stronger-than-expected U.S jobs data, but it fell back and ended down by 1.1 percent, or 75.82 points, at 6,712.67 points. That was the FTSE’s lowest close since it ended at 6,663.62 points on Feb. 14.

Traders said new signs of tension between the United States and Russia over Ukraine also put pressure on stocks.

A U.S. warship passed through Turkey’s Bosphorus straits on Friday on its way to the Black Sea, although the U.S. military described this as a “routine” deployment scheduled well before the crisis in Ukraine.

“The pressure is growing to the downside,” said Hantec Markets analyst Richard Perry.


The FTSE 350 Mining Index fell 3.7 percent, weighed down by a drop in the price of copper on concern 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 default was likely to force a re-pricing of credit risk in a market that has long assumed that even high-yielding debt carried an implicit state guarantee.

“Market participants are concerned that the recent Renminbi devaluation and unwillingness of Beijing to swoop in and bail out the affected investors will trigger a domino effect which will test traders using copper as collateral for financing deals,” said Sucden Financial research analyst Kash Kamal.

The FTSE rose 14.4 percent in 2013 to post its best annual gain since 2009. It is down 0.5 percent in 2014, but many traders remain optimistic. They expect a political solution in Ukraine crisis and see the FTSE eventually hitting a record high 7,000 points as the UK’s economic recovery gathers momentum.

“Whenever the market has wobbled, we’ve seen buyers coming in. We have the momentum to float a bit higher from here,” said MB Capital trading director Marcus Bullus.

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