UK Shares Drop on Global Economy Concerns

Having climbed to within 39 points of the psychologically-significant 6,000-point mark, the UK's leading index fell hard on Tuesday under the weight of economic concerns.

The FTSE 100 index closed down 70 points, dropping 1.2% to 5,891, while the FTSE 250 index fell 152 points or 1.3% to 11,633.

Concerns about China's economy resonated globally after the country's government increased fuel prices for the second time in two months amid rising oil prices. This move could put pressure on consumer spending in the country, and economic worries have already surfaced after China lowered its gross domestic product growth target earlier this year. International Monetary Fund managing director Christine Lagarde today also warned of the impact that a jump in oil prices would have on the global economy.

Meanwhile, US home construction dropped 1.1% in February from January, countering an expected 1.3% increase. Single-family housing starts declined by 9.9%, the largest drop in a year. However, building permits increased by 5.1% month over month, to their best level since October 2008, indicating future construction will likely be on the rise.

On the LSE, miners applied the most pressure amid fears China's economic outlook will hamper demand for basic materials. Fresnillo (FRES) was the worst off, down 5.0% by close of play, while Rio Tinto (RIO) and Anglo American (AAL) shed 4.1%-4.2% each. Of the 15 main casualties on the top tier Tuesday, 11 were mining-related stocks.

Other notable losers were financials, with the banking sector a little edgy ahead of tomorrow's Budget. Lloyds Banking Group (LLOY), Barclays (BARC) and HSBC (HSBA) dipped 2.2%-3.0% lower.

Only two FTSE 100 listings achieved gains of over 1% today. Vodafone (VOD) was the standout winner, up 2.1%, after the Supreme Court of India rejected the government's petition to review a ruling that the mobile giant isn't liable to pay taxes on a 2007 acquisition. Vodafone said the decision "emphasises the legality and bona fides of the transaction."

International Consolidated Airlines (IAG) also outperformed, achieving uplift of 1.2% as the heavy fuel consumer saw oil prices plummet 2.3%.