Emerging markets slowdown hits food and drink companies

SABMiller falters in Latin America as Nestlé posts slowing growth in Asia

Food and drink companies were hit by fears of slowing demand from emerging markets. SABMiller dropped 2% to £25.99 after it said sales were flagging in Latin America, its key region. The company posted a 4% rise in beer volumes in the first half, as growth across other regions offset the slowdown in Latin America.

Analysts were pleasantly surprised by the company's near double-digit growth in Europe despite, or perhaps because of, the ongoing crisis there. SABMiller said it benefited from the Euro 2012 football tournament, which sent volumes up by 10%.

There was more evidence of a slowdown in emerging markets from Nestle's results. The world's biggest food company said growth in Asia, Oceania and Africa fell to 9.4% from 11.6%. That had a knock-on effect at London-listed food and consumer goods group Unilever. The company behind Hellmann's mayonnaise dropped 1.1% to £23.20.

Over to banking, where there was more bad news for Barclays, which said it would set aside another £700m to cover the cost of claims resulting from the payment protection insurance misselling scandal. Its shares toppled 1.5% to 240.7p.

The FTSE 100 closed almost unchanged, up 0.1% at 5917 points. The mid-cap index ticked up 0.2% to 12071 points. European markets were largely flat, with France's leading share index up 0.3%, and Germany's index 0.6% higher. As well as company specific news, markets were still reacting to the news that China's economic growth slowed to 7.4% in the third quarter from a year earlier. Colin Cieszynski at CMC Markets said:

Economic data out of China continues to be mixed. So far, the People's Bank of China has once again held off from easing monetary policy further suggesting that although the economy continues to struggle, it isn't in dire straits either. It looks like the street is going to have to get used to a slow growth China rather than the red hot China of the last decade. This could in the near term limit the demand for resources and subsequently commodity prices.