* FTSE 100 index falls 0.5 percent
* Miners top sectoral fallers
* SABMiller (LSE: SAB.L – news) shares drop after sales data
* G4S (LSE: GFS.L – news) hit by Deutsche Bank (Xetra: DBK.DE – news) downgrade
By Tricia Wright
LONDON, April 15 (Reuters) – Britain’s top shares fell on Tuesday, weighed down by miners on fears over slowing demand in China, while the deteriorating situation in Ukraine and concerns about corporate earnings knocked sentiment more broadly.
Miners came under pressure alongside base metals after data showed that the Chinese money supply grew at the weakest pace in more than a decade in March, another sign of softening economic momentum in the world’s top metals consumer.
Global miner Rio Tinto (Xetra: 855018 – news) , off 3 percent, led the market lower after saying weather-related disruptions in Australia and Canada cut its iron ore shipments.
The sector declines accounted for around a third of the FTSE 100’s points decline, with the UK benchmark down 31.47 points, or 0.5 percent, at 6,552.29 points by 1437 GMT, trading back in the red after Monday’s 0.3 percent rise.
The index last week suffered its biggest weekly loss in a month, dropping 2 percent as Wall Street’s fears about over-stretched stock valuations, particularly in the technology sector, spread to Europe. With Intel and Yahoo (TLO: YA-U.TI – news) set to report earnings on Tuesday, those concerns may resurface.
“(They) will feed into the fears about the tech sector, particularly if they miss expectations,” CMC Markets senior market analyst Michael Hewson said.
“I think markets going into the Easter break will be a little bit reluctant to get aggressively long stocks … We need (a significant beat on the earnings for this week) and a significant ratcheting down in tensions in the Ukraine, neither of which I expect.”
Ukrainian armed forces on Tuesday launched a “special operation” against separatists in the town of Kramatorsk in the east of the country, Interfax news agency quoted the Defence Ministry as saying.
Underscoring the worries about earnings, brewer SABMiller (Berlin: BRW1.BE – news) fell 2.4 percent, one of the biggest declines in the FTSE 100. Disappointing full-year sales triggered profit-taking on a stock that trades at a premium to all its peers.
Charts signalled more falls, with analysts saying the FTSE 100 could move to around the bottom end of a range, between 6,400 to 6,800 points, it has been trapped in since October.
“It does feel a bit heavy with recent sell-offs being more intense than rallying periods. The key level is 6,500 and if this gives way then I would expect to see some more downside action towards 2014 lows (of 6,416),” FOREX.com technical analyst Fawad Razaqzada said.
Security (LSE: SRG.L – news) group G4S was another big faller, off 2.8 percent, with traders blaming a Deutsche Bank rating downgrade to “sell” from “hold” and target price cut to 210 pence from 221 pence. The shares are currently trading at 241 pence.
The investment bank acknowledged G4S’s efforts to overhaul itself following a series of damaging failures and cited its exposure to emerging markets as a strength. But it reckoned its valuation is looking full.
G4S trades at a premium to its peers. It is on a 12-month forward price/earnings ratio of 16.9 times, according to Thomson Reuters StarMine SmartEstimates, which focus on the up-to-date predictions of the historically most accurate analysts.
Smaller security firm Securitas (Other OTC: SCTBF – news) , meanwhile, trades on 12.8 times, while outsourcing peers Serco and Capita (LSE: CPI.L – news) are on 14.2 times and 16.2 times respectively. (Additional reporting by Atul Prakash; Editing by Alison Williams)