London - Britain's top share index was dragged lower on Wednesday by Unilever, hit after a broker downgrade, and by mining companies suffering from a slump in metal prices due to China's devaluation of the yuan.
China, the world's second-largest economy and the biggest consumer of metals, devalued its currency on Tuesday after a run of poor economic data, raising the costs of imports.
London nickel, copper and aluminium all dropped to six-year lows on Wednesday as fears intensified that China's weaker yuan would corrode demand.
The UK mining sector was down 2.9 percent in early deals after shedding 4.4 percent in the previous session.
Glencore declined the most, dropping 5.2 percent.
Blue-chip peers Rio Tinto, BHP, Antofagasta and Anglo American all fell around 3 percent, with mid caps Vedanta, Lonmin and Petra down between 2.9 and 5.4 percent.
“It takes a brave soul and deep pockets to buy these mining stocks when they're this heavily down,” said Jasper Lawler, analyst at CMC Markets.
The FTSE 100 was down 1.4 percent by 08h27 GMT, slightly outperforming other European equities.
Consumer goods company Unilever shed 3.5 percent after it was cut to “sell” from “neutral” by Goldman Sachs, which said the downgrade was spurred by the rise of e-commerce and slowdown in emerging markets.
“We see the company as negatively positioned with respect to the changes in the retail environment as the e-commerce channel grows,” Goldman Sachs said in a note.
Randgold added 1.3 percent, the only riser on the blue-chip FTSE 100 index, as the devaluation of the yuan supported gold prices.
REUTERS