Falling copper price hits UK stocks

Copper prices are falling.

Copper prices are falling. - Credit: Getty Images/Hemera

Copper became the latest commodity under pressure today as billions were wiped off the values of a clutch of UK-listed companies after the World Bank slashed its forecast for world economic growth.

The metal, often seen as a barometer of industrial demand, was down 6%, following on from the recent slump in the oil price that has also been affected by weakness in global prospects.

London-listed mining and commodities firms were hammered, with Glencore shedding £3 billion of its value and Anglo American losing more than £1 billion of its worth as both plunged by 9%.

Meanwhile, Antofagasta fell 8% and BHP Billiton was down 6% with Rio Tinto and Fresnillo also losing out.

The losses for the heavyweight stocks helped the wider FTSE 100 Index tumble by more than 100 points during the session though it later pared back some of the losses.

It came after the World Bank cut its forecast for global growth in 2015 from 3.4% to 3%, citing stagnation in Europe and Japan and a slowdown in China’s expansion. It also estimated growth for 2014 at 2.6%, lower than its earlier expectation of 2.8%.

Growth for this year is expected to be better than last year partly due to the economic benefits of low oil prices and the strengthening US economy as well as low interest rates, though the pace will be lower than had been thought.

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The eurozone is expected to grow by just 1.1% this year, down from a forecast in June that it would expand by 1.8%, according to the World Bank’s Global Economic Prospects report.

It said that the “fragile” global upturn had seen different economies experience varying fortunes, with the US and UK “gathering momentum” amid jobs growth and ultra-low interest rates.

“But the recovery has been spluttering in the euro area and Japan as legacies of the financial crisis linger,” the report said. “China, meanwhile, is undergoing a carefully managed slowdown.”

The report expects the UK to grow by 2.9% this year, above the average for high income countries of 2.2% but behind the United States at 3.2%.

China is expected to grow by 7.1% this year, a slowdown from 7.4% in 2014. The 2015 forecast is also lower than a previously expected 7.5%.

Jasper Lawler, markets analyst at CMC Markets, said: “The World Bank downgrade and collapsing industrial metal prices such as copper just act to confirm global growth fears that plagued markets in 2014 and are continuing to do so in the New Year.

“Declining oil and copper prices reflect in part oversupply but also slower demand particularly from the likes of China, the world’s biggest buyer of commodities.”

The price of a barrel of Brent crude is at near-six year lows of below 50 US dollars, having lost half its value since last summer.

A Treasury spokeswoman said the report “provides further evidence that the Government’s long term economic plan is working with the UK expected to grow faster than other high income countries in 2014”.

But she added: “The report highlights the external threat the UK faces which is why we must continue to work through the plan, securing robust growth and delivering a better economic future.”