UK shares fall to 5-1/2 month low, supermarkets sink

Miners among worst hit.

Britain’s top equity index hit its lowest level since mid-January on Tuesday, pulled down by miners and supermarkets and underperforming even euro zone shares despite Greece being hours away from a repayment default.

While new data showed Britain’s economy enjoyed a stronger start to the year than previously thought, buoyed by big-spending consumers and an upturn in business investment, weak exports continued to drag on growth.

The FTSE 100 index fell 0.9%, with mining stocks BHP Billiton and Anglo American down 2 to 3% after Australia cut its iron-ore price forecast for 2015 by 10% and metal prices slid on excess supply fears.

Retailers also fell after data from Kantar showed the overall UK grocery market fell 0.1% in the 12 weeks to June 21. Tesco, whose sales were estimated to have fallen 1.3%, saw its shares fall 2.2%.

Standard Life was among the worst performers, falling 2.5% after analysts at RBC downgraded the stock to “underperform” from “sector perform”.

As Greece came closer to defaulting on a 1.6 billion euro ($1.8 billion) loan and at risk of sliding out of the euro zone , the FTSE 100 underperformed a 0.2% drop for top euro zone stocks, which were supported by hopes for a last-minute Greek deal.

“(Greece is) one of the biggest hurdles that the euro zone has faced. We could see the FTSE fall down to 6,400 points this week,” said Logic Investments’ Harry Shann.

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