The FTSE 100 ended the week below the psychological 5,500 level at 5,495.2, down 50.4 points on Friday, although this was above the early afternoon lows.

Falls in crude and gold prices meant that the oil and mining stocks lead the charge downwards. In the oil sector, Cairn Energy slipped 178p to 2,535p and BP was off 15.5p at 496p. As for the miners, share prices for all the big players fell. Anglo American was down 236p to 2,673p, Vedanta was down 108p to 1,902p, Rio Tinto was down 270p to 4,800p and BHP Billiton ended 80p lower at 1,361p. (more…)

The Chinese state controlled Aluminium Corp of China (Chinalco) has paid £7bn for a 9% stake in in the Rio Tinto Group. This equates to £60 per share which is 20% higher than the £50 per share offer from BHP Billiton. The invetment is the largest deal to date by a Chinese corporation in a foreign business.

The deal represents a strategic move by China, as it has few natural resources of its own, yet has a great demand for such resources given the rapid and continuous development of the country.