Iron ore slump damages mining stocks

<p>Mining stocks fell across the board during trading yesterday.</p>

Mining stocks slipped around the world yesterday (March 10th) as investors grew increasingly cautious over the future of the sector due to a slump in iron ore.

The share prices of firms such as BHP Billiton, Rio Tinto and Glencore Xstrata took hits after iron ore delivered into China fell by 8.3 per cent on Monday.

Fears over a slowdown in the Chinese economy have also been fuelling concerns about the short-term future of the mining sector. The Chinese economy was not damaged by the global financial slowdown as much as many other major countries, but growth has stagnated in the last couple of years, leading to fears the nation's rapid expansion is coming to an end.

Share prices affected

Stocks in BHP Billiton were down by more than four per cent on the Australian Securities Exchange yesterday, while the share price of Rio Tinto was 5.7 per cent lower, BBC News reports. There was also a large fall in the value of Fortescue Metals stocks, with the company's value having slipped back by nearly ten per cent in Sydney on Monday.

"Any poor news from China is always going to hit short-term market sentiment, especially in the mining sector, and fears of slower growth will hit base metals," said Steven Mayne, director at IPR Capital.

China is vital to the state of the mining sector as it is currently the world's largest buyer of iron, which it is using for major infrastructure projects all over the burgeoning Asian nation.

There was better news for the share prices of some of the mining stocks hit yesterday during the early hours of trading this morning. Although BHP Billiton's stocks were only 0.14 per cent higher this morning, the share price of Rio Tinto had bounced back by almost one per cent.

Glencore Xstrata's stocks were higher as well, with the company's value rebounding by 0.28 per cent from the start of the day, erasing some of the losses sustained earlier in the week.

Find out about commodities trading and learn CFD strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.