LONDON MARKETS: FTSE 100 Down As Tesco Sinks, Chinese Data Weigh

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks tumbled Tuesday, with fears that China will cut its growth forecast hitting shares of commodity producers.

Among them, Tesco PLC shares sank after the supermarket company issued a new profit warning.

The FTSE 100 fell 1% 6,607.47, with no sectors trading higher.

Ahead of the open of European trade, Chinese state media reported that the government might cut its 2015 growth target to as low at 7%, down from the 2014 goal of about 7.5%. China's top leadership is meeting for the annual Central Economic Work Conference in Beijing. Chinese stocks, which have been soaring recently, dropped sharply, leaving the Shanghai Composite down more than 5%.

In the mining group, shares of BHP Billiton PLC lost 2.4%, and Rio Tinto PLC fell 2.3%. Among energy issues, Tullow Oil PLC declined 3.7% and oil-services company Petrofac fell 3.4%. Oil prices (CLF5) remained under pressure, trading at five-year lows.

"Unless investors close [U.S. dollar] positions in the run up to Christmas, or the [People's Bank of China] add further stimulus to its economy in the coming weeks, it appears unlikely the oil markets will enter a correction period anytime soon," said Jameel Ahmad, chief market analyst at FXTM, in a note Tuesday.

Tesco shares sank 15% to their lowest level since February 2000, as the supermarket company cut its full-year profit forecast, citing investments it's making in its business as it battles rival chains. Group trading profit will not exceed 1.4 billion pounds ($2.2 billion), said Tesco, which compares with analysts' expectations of GBP1.94 billion.

"If there had been hope that the market would be immune to yet another profit warning, this quickly evaporated as Tesco has provided profit guidance which is nearly 30% shy of an already lowered estimate," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, in a note.

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