Market Report: Fears of China slowdown take shine off Corus

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What a difference a day makes. On Tuesday it seemed as if investors could not get their hands on enough Corus shares, while yesterday they rushed to dump the Anglo-Dutch steel group.

What a difference a day makes. On Tuesday it seemed as if investors could not get their hands on enough Corus shares, while yesterday they rushed to dump the Anglo-Dutch steel group. It closed 2.25p lower at 47.25p with dealers blaming growing concerns that the Chinese economy is heading for a slowdown.

Such a scenario would certainly be very bad news for the likes of Corus. The fast-growing Chinese economy is the world's biggest consumer of steel and has been to a large extent responsible for the soaring price of the metal in recent years. However, the country's government hopes to slow economic growth to 7 per cent this year, from 9 per cent in 2003, and it seems to be succeeding.

Analysts note that China last month become a net exporter of steel for the first time in nine years. This does not bode well for the value of steel going forward. Nor does a warning from America's Steel Dynamics. The Indiana-based appliance steel maker said it expected steel prices to soften next year and warned that its fourth quarter earnings will not live up to hopes.

Meanwhile, the construction sector had another dire day after Taylor Woodrow, down 8.5p at 235p, lowered its sales forecasts, blaming a slowdown in the UK housing market. In response, Persimmon dropped 19.5p to 600p, Redrow retreated 12.25p to 331.75p, Westbury fell 14.5p to 365p and Barratt Developments gave up 12p to 500p.

Wimpey fell 11p to 347p as analysts at Numis Securities returned from a meeting with the group's management in a bearish mood. "Wimpey gave a clear indication that the market was difficult and that sales rates were not only lower than last year but that they were lower than in 2002," said Numis.

Among blue chips, Hays was under pressure, falling 5.25p to 128.25p, as Cheuvreux warned its clients that the stock is the second most expensive recruitment player in Europe. As a result, the French broker downgraded its recommendation on Hays to "sell" from "buy" and set a price target of just 115p. Cheuvreux believes that growth in the UK recruitment market has slowed down in recent months.

Elsewhere, Goldman Sachs expressed concerns that food producers are facing an increasingly challenging trading environment and warned that companies like Unilever, 6.75p weaker at 451.25p, will suffer. The US broker certainly has a point. The world's three biggest food companies ­ Nestlé, Kraft and Unilever ­ have all experienced a decline in volume growth over the last three years. The FTSE 100 was also in retreat as London traders responded to falls on Wall Street. The index lost 38 points to 4,616.

Autonomy fell 4p to 188p on the back of a disappointing set of third quarter figures. JP Morgan did not help matters for the stock as it downgraded its rating on the software specialist to "underweight" from "neutral" in response.

Rumours that a major shareholder in Ryanair is looking to sell down its holding caused the no-frills airline to drop 0.11p to 3.65p. As dealers talked of a potential placing of up to 15 million shares, suspicion fell on the founding Ryan family and Michael O'Leary, the chief executive. Both hold substantial holdings in the company and tend to sell down their stakes in unison every year.

South Staffordshire Water fell 27.5p to 975p as Merrill Lynch advised investors to cash in their chips after Tuesday's announcement that the utility had received a bid approach. The US broker believes the private equity offer was made when shares in the water group were trading below 800p. This means there is a possibility that either the deal is not completed or that it goes through at a price below current market levels. Merrill argued that a counter bid is unlikely.

Xaar ticked 0.5p lower to 121p in response to the sale of 25,000 shares at 120p by Hugh Baker-Smith, an executive director at the printing technology group. Venture Production lost 0.5p to 242.5p after fund management group Fidelity sold 1 million shares, leaving it with a 5.5 per cent stake of 6.6 million shares. Supporting the stock from a greater drop was news that Michael Wagstaff, the oil services group's chief executive, had bought 80,000 shares at 200p.

Sopheon added 1.25p to 21.5p after the software group unveiled a joint venture with Siemens of Germany. Carrs Milling was in demand, gaining 5p to 367.5p, ahead of its full year results, expected at the start of next month. Word has it the figures are set to impress and may beat market expectations.

Punters who bought into Edinburgh Oil & Gas on rumours of a positive drilling update from the group's Buzzard field were disappointed. Shares in the explorer dropped 9p to 173.5p on news that one of its wells in the Southern Gas Basin of the North Sea had been plugged and abandoned after failing to find sufficient oil.

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