Market Report: Miners crash as investors fear end of bull run

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If history is anything to go by, it might be a good time to bite the bullet and get out of the market - during the last World Cup in 2002, the FTSE 100 dropped 8.5 per cent. Many investors in the mining sector seem to be doing just that, with some saying that the three-year bull market in metal and commodity stocks has run its course.

Mining companies occupied six of the top 10 fallers in the main index, with Rio Tinto taking the biggest hit with a 7 per cent fall, 194p, to 2,580p. The shares have now fallen more than 22 per cent from the high. Anglo American, down 135p to 1845p, BHP Billiton, 65.5p worse at 935.5p, and Xstrata, 121p weaker at 1,815p, all suffered as investors took more money off the table.

Bulls of mining stocks were sticking to their guns in the belief that this is merely a dip in a long-term upward trend, but that argument is beginning to sound a little hollow. Inflation and slowing growth in the crucial emerging markets could mean much leaner times ahead for mining stocks.

Bearish traders in London had good reason to sell after a grim overnight performance in south-east Asian markets, with little support coming from Wall Street. The FTSE 100 closed 143.4 lower at 5,562.9, with no sector escaping some selling pressure. Will Armitage, of the spread-betting group IG Index, said: "There is good support for the market at the 5535 level, but if we fall through that level traders will be very concerned."

The death of the Iraqi insurgence leader, Abu Musab al-Zarqawi, also affected the market, with the dollar strengthening and oil dipping below $70 per barrel on the news. As a result, oil stocks were out of favour with BP, also facing the possibility of a criminal investigation into a 270,000-barrel spillage in Alaska, dropping 21p to 603p and Shell closing 65p worse at 1,745p. Cairn Energy also attracted sellers, closing 117p worse at 1,925p.

Only six FTSE 100 stocks ended the session in positive territory, with the satellite broadcaster BSkyB the best of the bunch, 9p firmer at 559p on solid volume of 24 million shares, as traders welcomed the news that Cable & Wireless will no longer market or sell its Bulldog broadband offering in the increasingly competitive home broadband market. There was also talk that its plan to make Premier League football available to the Freeview platform might boost revenues. Cable & Wireless, due to drop out of the FTSE 100, added half an penny to close at 106.5p.

In the second-line stocks, shares in the highly rated stockbroker and fund manager Rathbone Brothers rallied strongly in early deals, hitting a high of 1,277p, up 138p, as rumours circulated about a bid for the company. The names in the frame were the investment banks Close Brothers and UBS, although profit-taking in the afternoon saw the shares lose all of the early gains to close 21p weaker at 1,118p.

Peter Redfern, the deputy chief executive of the housebuilder George Wimpey, took advantage of a weak market to pick up 12,004 shares at 413p each, but he was unable to pick the bottom as the shares continued to slide, closing 24p worse at 403.5p. Global interest rate concerns have contributed to the weak market, despite a handful of broker upgrades in the last couple of days.

In the small caps, Oasis Healthcare, the dental surgeries group, confirmed that it has received a preliminary takeover offer after more than 10 per cent of its issued share capital was traded in the morning session. The shares closed 7p better at 24.75p.

Another stock thought to be in the firing line for a bid is AIM-listed Aricom. The shares ticked 2.25p better to 45.5p on a very solid volume of 12.4 million shares. The mining chemicals group is thought to have attracted the interest of a number of trade buyers, and traders speculated that a hostile bid could see the shares go as high as 70p. The group also announced the acquisition of 50 per cent of Rubicon, a Russian mining group, for $175m.

A very bullish AGM statement and confirmation that the sale of its Dubai business is well on track had no impact on shares in Medical Solutions, which remained unchanged at 7.37p. Some traders believe that the Dubai operations, for which the company confirmed it has received several offers, could be worth as much as the share price on its own. One trader said: "The lack of movement today is simply down to timing; if this announcement had come on a day when the market is up the shares would have rallied strongly."

The worst performer of the day was Sky Capital Holdings, 15p lower at 35p. Traders said that the stock is one of the least liquid, and yesterday's fall was down to a seller of only 3,500 shares. In cash terms, that is less than £1,250-worth of stock.