LONDON MARKETS: Miners Hit FTSE 100 After Chinese PMI Data

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- U.K. stocks slipped into negative territory on Monday amid ongoing concerns about a possible U.S. government shutdown and after disappointing Chinese manufacturing data.

The FTSE 100 index dropped 0.8% to close at 6,462.22, trimming its monthly gain to 0.8% and its quarterly advance to 4%.

Mining firms pressured the London benchmark, weighed by weaker-than-expected data from China. The HSBC China Manufacturing Purchasing Managers' Index for September came in at 50.2, lower than the preliminary reading of 51.2. Metals firms are sensitive to growth indications from China, as the country is a major user of natural resources.

Shares of Glencore Xstrata PLC (GLCNF) lost 2.1%, Rio Tinto PLC (RIO) dropped 1.4%, Anglo American PLC gave up 1.4% and BHP Billiton PLC (BHP) fell 1.1%. Metals prices were lower across the board.

Among other resource firms, shares of BP PLC (BP) erased 1.8% as the oil giant prepared to go to court in New Orleans on Monday for the second phase of its trial over the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

Other oil firms also declined, tracking oil prices lower. Shares of BG Group PLC dropped 1%, and Royal Dutch Shell PLC (RDSB) slipped 0.5%.

More broadly, investors were hesitant to take any big positions in stocks given the uncertainty over the U.S. budget. The government could face its first shutdown in 17 years after lawmakers over the weekend failed to agree on a budget for the new fiscal year, which starts on Tuesday. If House Republicans and Senate Democrats cannot agree by a Tuesday morning deadline, many government offices will close.

Banks, which tend to be among biggest fallers when investors shun risk, fell. Shares of Royal Bank of Scotland Group PLC (RBS) dropped 1.8%, Lloyds Banking Group PLC (LYG) lost 0.9%, and heavyweight HSBC Holdings PLC (HBC) erased 1.2%.

On a more upbeat note, shares of Persimmon PLC gained 2.4% after J.P. Morgan Cazenove lifted its view on the home builder to overweight from neutral. The analysts said they "continue to see scope for Persimmon to beat on expectations around the timing of its cash-return program."

In the same vein, shares of Shire PLC rose 0.5% after J.P. Morgan Cazenove lifted the pharmaceutical firm to overweight from neutral.

Shares of William Hill PLC added 0.3% after Deutsche Bank raised the bookmaker to buy from hold.

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