Confirmation that four key Chinese steel plants have cut production by a fifth this year drove another wave of equity selling, particularly mining stocks, around the world this morning.

The Chinese also halted trading in copper futures for tomorrow after three days of successive price falls.

The Chinese economy's huge demand for raw materials, such as metals, was seen as one of the key props of the world economy. Steel production was already on the slide in US and Europe.

On the FTSE 100, which dropped 206 to 4,399 by 10.35am, the basic resource index was the hardest hit, falling 8 per cent compared with the bank index, which was down just 3 per cent. The oil and gas producers' index lost 5 per cent.

Of the miners, the copper producers were worst hit with Kazakhmys down 13 per cent at 360p. It recently drew down some $1 billion on a big overdraft facility to finance big expansion plans in Kazakhstan. It must start repaying the principal next year. Fellow Kazakh miner Eurasian Natural Resources lost 13 per cent to 400.75p.

Among the banks, Standard Chartered, which is geared to the Far Eastern economy, lost 13 per cent to £11.35.

Meanwhile J Sainsbury lost 15 per cent to 267p, despite better-than-expected trading figures on fears that Robert Tchenguiz would be forced to sell his stake, likely bought with borrowed money from Kaupthing. He has just been forced to sell his stake in pub group Mitchells & Butlers to Joe Lewis to meet margin calls from the Icelandic bank.

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