Mining stocks weigh on the FTSE

Wednesday’s rally proved short lived as European markets reversed the mid week gains. Concerns over the strength of yesterday’s rally proved accurate as the FTSE and DAX retraced back to levels seen at the beginning of the week. Mining stocks weighed on the FTSE as concerns over the Chinese economy returned to the fore. China is due to release crucial inflation and GDP data on Friday and ahead of such important numbers, metal prices have retreated as concerns remain that the Chinese government will have to reign in prices to prevent the world’s second biggest economy from overheating. Such concerns also drove oils lower with WTI trading down to $106 a barrel and oils stocks in London shedding yesterday’s gains.

UK investors were further rattled by the announcement from consumer goods group Reckitt Benckiser that the CEO was to retire moths after the departure of the finance director. A highly regarded management team has now lost two vital members, this just served to unsettle investors. Arm Holdings remained centre of attention as it retraced yesterday’s gains, falling 1.5% on concerns that the fallout from Japanese earthquake might dampen demand.

Uncertainty remained around the banking sector as Lloyds traded back below 60p after a Barclays Capital reduced the target on the part state owned bank. Long suffering investors of Lloyds have watched the bank slide from highs of 78 in the third quarter 2010 to today’s new lows for 2011.

Macro data from the US failed to excite investors as jobless claims came in slightly higher than expected and producer prices rose slightly faster than expected. The fragility of the US recovery, coupled with the ongoing uncertainty over fiscal policy in the US continues to weigh on investor sentiment.