Xstrata led a mining sell-off amid revived worries that Glencore, its biggest shareholder and marketing partner, was under pressure to sell down its stake, particularly given Xstrata’s exposure to ferrochrome, which is used for making stainless steel.

Glencore, the Swiss metals trader, takes a fee for marketing Xstrata’s metals but also acts as the miner’s debt collector for sales of its ferrochrome, bearing 60 per cent of the risk of nonpayment from customers.

However, ferrochrome prices have fallen through the floor after Chinese mills cut the price this quarter by 55 per cent. That move, taken last week, triggered a profit warning from International Ferro Metals, a ferrochrome producer, and a writedown of its stockpiles.

Ferrochrome accounts for about 10 per cent of Xstrata’s earnings and probably a higher proportion of Glencore’s. Sentiment was not helped, either, by Aquarius Platinum warning that falling nickel and rhodium prices meant that it would make losses of up to $85 million (£60 million) in the first half. It lost 18p to close at 159½p. Xstrata ended the day 35½p down at 685p.

Worries over property stocks weighed on the FTSE 100. It closed 14.6 points down at 4,194.41, although a strong opening on Wall Street brought the London index back from a slump of 78 points earlier in the day.

British Land fell 14p to 431p, hit by talk that it is putting the finishing touches to a sale of a half-share in the Meadowhall shopping centre, in Sheffield, for a discount price to a joint venture between Abu Dhabi funds and the AIM-listed London & Stamford. It is also thought to be looking at a sale of its Broadgate office complex above Liverpool Street station in London.

Morgan Stanley believes that the Meadowhall sale, coupled with a £1.5 billion share issue, could alleviate worries about a covenant breach. Goldman Sachs placed British Land on its “conviction sell” list, however, saying that it would need to sell up to 40 per cent of its £11 billion portfolio to have enough cash to keep buying properties. Birmingham’s Bullring may be next on the block. It is jointly owned by Land Securities, down 23p at 634p, Hammerson, down 5p at 393p, and Henderson, which rose ¼p to 63¾p.

Severn Trent fell 41p to £11.46 and sent the water sector tumbling as it said that a slump in use by industry had accelerated in the past two months. It predicts that lost demand will be nearly twice what it expected at the end of November. It also said that falling inflation meant that Ofwat, the water industry regulator, was unlikely to allow it the price rises that it had hoped for. Pennon fell 15¼p to 466¼p and United Utilities slid 16p to 567p.

Wolseley fell 21p, or 10 per cent, after its 30 per cent fall on Monday as UBS, its broker, said that a £1 billion rights issue looked “very likely”. 3i, the private equity firm, fell 13½p to 254¾p ahead of grim figures that are expected today. Intermediate Capital, which finances buyouts, slid 160½p to 414p as it warned that provision for bad debts would soar and that 13 per cent of its portfolio was in trouble.

— New York: Strong earnings results at American Express, Bristol-Myers and US Steel helped to bolster share prices. The Dow Jones industrial average closed up 58.70 points at 8,174.73.

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