FEARS over plans to curb inflation in China hit the FTSE 100 Index hard yesterday as it slumped nearly two per cent.

The London market closed 108.8 points lower at 5867.9.

Mining stocks suffered, with silver miner Fresnillo dropping 84p to 1346p, copper firm Kazakhmys off 84p at 1538p and coal, copper and nickel firm Xstrata losing 74p at 1388.5p.

Energy stocks were also weak, as the price of crude oil fell, with BP down more than two per cent, or 11.95p at 494.1p, and Tullow Oil off 53p at 1307p, and Cairn Energy down 9.6p at 437p.

British Airways closed nearly two per cent down on its last day of stock market trading before its merger with Spanish carrier Iberia.

The merger will complete tomorrow and shares in the new holding company, International Consolidated Airlines Group, will be listed on stockmarket in London and Madrid on Monday morning.

Shares shed 5p to 282.5p as investors also reacted to a warning from easyJet that its half-year losses could double due to the impact of weather disruption and the rising cost of fuel.

The stock fell 16 per cent, or 73.8p to 382p, after it revealed the snow chaos cost it £18m.

More Than insurer RSA revealed its bill for UK weather-related claims was expected to be £110m more than normal.

RSA said full-year earnings would be lower than market forecasts – at about £600m to £630m against predictions for at least £700m. Shares fell 1.6p to 133.2p.

Primark owner Associated British Foods saw shares drop 36p to 1079p.

Barclays was up 7.1p at 303.3p and Lloyds ahead 0.6p at 66.8p, as sentiment in the sector was lifted by strong results from Morgan Stanley in the US, which said its quarterly profits jumped thanks to strong revenues from investment banking.