FTSE falls for 3rd day; charts gloomier

After a strong start to the year which saw UK-listed miners add 8.5%, analysts are starting to question whether much higher share prices are justified given the prospects of higher costs and an uncertain outlook for the underlying commodities.

China's drive to slow down its economy threatens demand for the natural resources that are the lifeblood of UK-listed mining and energy giants, and raises concern that the Asian economy could be heading for a hard landing.

By 0848 GMT, the FTSE 100 was down 28.44 points, or 0.5%, at 5,846.39, after hitting its lowest level since Feb. 16 at 5,838.94 in early trade.

The weight of global concerns on the blue-chip index was underlined by its underperformance against the more domestic- focused small-cap equivalent, which traded flat.

Implied volatility on the FTSE, seen as a barometer of investor risk aversion, rose 3.4% to one-week highs.

Russian precious metals miner Polymetal topped the loser board with a 5.6% drop after UBS downgraded the stock to 'neutral', saying "growth is largely priced in", while costs are likely to rise.

Kazakhmys fell 1.8%. Essar Energy and Cain Energy – both seen as likely candidates to leave the FTSE 100 in this week's reshuffle – were each down around 1.7%.

Pumps manufacturer Weir, which supplies oil services firms and relies on global economic health for its profits, fell 2%.

The sell-off has pushed the FTSE 100 towards the bottom of the 5,829 to 5,964 range in which it has been trapped since early February, darkening the technical outlook on the index.