LONDON MARKETS: Miners, British Gas Parent Pull FTSE 100 Lower

By Carla Mozee and Victor Reklaitis, MarketWatch Credit Suisse remains underweight miners

LONDON (MarketWatch) -- U.K. stocks closed lower Thursday as a profit warning from British Gas's parent company weighed on its shares, while miners declined after a lackluster update on China's manufacturing sector.

The benchmark FTSE 100 index finished down 0.3%. Losses were trimmed after accelerating in the wake of downbeat manufacturing and services-activity figures from the eurozone, the U.K.'s largest trading partner.

Earlier Thursday, activity in China's manufacturing sector slowed in November, according to a closely watched report from HSBC, adding to worries about growth for a key buyer of metals. Pressure was on mining stocks after the report, leaving Rio Tinto PLC (RIO) and BHP Billiton PLC (BHP) both down by nearly 3%.

On Wednesday, shares of iron-ore producers were hit as iron-ore prices sagged to a more than five-year low.

Credit Suisse analysts said Thursday they remain underweight the mining sector. "On a one-to-three-year view, we see the risk of a hard landing in China as significant; in a bear market, 40% of production has to fall below cash costs (as with thermal coal), and that is not in the price," they said. "Top down, we find ourselves most bearish on copper, aluminum and carbon steel."

Also among FTSE 100 decliners, Centrica PLC shares slumped nearly 2% after the utilities company said it now expects full-year adjusted earnings of 19 pence to 20 pence a share, down from a previous expected range of 21 pence to 22 pence. Mild weather in the U.K. and trading conditions for British Gas Services are among the factors driving the profit forecast lower, the company said.

But Babcock International Group PLC , climbed almost 6% as the engineering services firm said interim profit rose to 114.1 million pounds ($178.5 million) from GBP91.6 million the previous year, on higher revenue of GBP1.94 billion.

Shares of chemicals and precious metals company Johnson Matthey PLC jumped 6% after the firm raised its profit view for the year.

Outside of the FTSE 100, Mothercare PLC shares advanced nearly 6% as the baby products retailer swinging to a half-year profit.

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