FTSE 100 index down 3.6%; Rio Tinto, BHP Billiton shares drop LONDON (MarketWatch) -- Mineral extractors, oil producers and banks fell in London on Monday, as investors took on board more gloomy news on manufacturing and the housing market. The U.K. FTSE 100 index fell 3.6%, or 156.15 points, to 4,131.86. Other European shares were also lower, as were U.S. stocks. See Europe Markets. See U.S. Market Snapshot. Shares on both sides of the Atlantic had a good run last week as investors picked up beaten-down stocks. But this move only meant that losses made over the last twelve months as investors fretted about the health of the global economy were pared back to roughly 34%. Next year "is likely to be another testing year for equity investors given a difficult macro outlook," said Morgan Stanley equity strategists. They're expecting U.K. profits to fall by one-third in this cycle and dividends to fall by between 15% and 20%. More downbeat macroeconomic data on housing and manufacturing out Monday didn't help matters. Data from Hometrack showed that house prices fell 1.1% in November, bringing the annual rate of decline to 8.1%, from 7.3% recorded in October. Also, figures compiled by the Bank of England showed that mortgage approvals fell to 32,000 on October, down 1,000. Meanwhile, the purchasing managers index for U.K. manufacturing slumped to record low in November, while euro zone manufacturing PMI also fell to a record low and a gauge of China's manufacturing activity in November marked its sharpest contraction on record. Miners count China as one of their biggest customers and Anglo American shares fell 13.3%, Rio Tinto dropped 8%, as did former bid suitor BHP Billiton. Xstrata shares fell 10.8%. It said that its Xstrata-Merafe chrome venture will make further cuts to ferrochrome production due to short-term weakness in demand. Asia-focused banks were also under pressure, with HSBC Holdings down 2.4% and Standard Chartered (UK:STAN: news, chart, profile) down 8.4%. Oil producers trading lower included Royal Dutch Shell (UK:RDSA: news, chart, profile) (RDS.A: 48.80, -4.65, -8.7%) , down 4%, and BP (BP: 44.61, -4.08, -8.4%) (UK:BP: news, chart, profile) , down 4.3%. Light sweet crude oil futures dropped $3.70 to $50.73 a barrel as OPEC held tight on production. Financials, retailers in the spotlight Shares in asset management firm Aberdeen Asset Management (UK:ADN: news, chart, profile) dropped 7.2%. Fiscal-year net profit rose to 46.8 million pounds ($71.7 million), from 30.6 million pounds, but funded net new business dropped to 1.0 billion pounds, from 8.7 billion pounds in the same period a year ago. "Conditions in the asset management industry are tough and will remain so for some time," said CEO Martin Gilbert. Shares in U.K. fund management group New Star Asset Management (UK:NSAM: news, chart, profile) plunged 50%. The U.K. listing authority denied a request from the firm to halt trading in its shares until the outcome of "advanced and constructive" discussions with its bank syndicate is known. Last week, New Star froze dealings in its international property fund due to increased redemptions. "In essence the company is suffering from a crisis of confidence which, we suspect, can only be solved by dilution of equity," said analysts at Arden Partners. Retailer JJB Sports (UK:JJB: news, chart, profile) fell 15.4%. It said it has agreed to sell the leases of its four retail stores to Sportsdirect.com Retail for 3.4 million pounds ($5.2 million). The lease assignment move appears dilutive as the stores made 1.1 million pounds in pretax profit during fiscal 2008, noted analysts at Altium Securities. Sports Direct (UK:SPD: news, chart, profile) shares traded flat. A report in the Sunday Telegraph newspaper said that banking group Barclays (BCS: 9.40, -1.85, -16.4%) (UK:BARC: news, chart, profile) , which has lent JJB Sports approximately 60 million pounds, has appointed accountancy firm Grant Thornton to advise it on JJB's business plans.

Source