S&P cuts Glencore outlook to negative on weak commodities

SYDNEY, Sept 3 (Reuters) - Standard & Poor's on Thursday cut its outlook for Glencore Plc (Xetra: A1JAGV - news) to 'negative' from 'stable' after slashing its price forecasts for metals and amid uncertainties about China's economic outlook.

The mining and commodities firm posted a 29 percent slump in first-half earnings in August and cut its forecast for earnings from trading, citing tough market conditions.

"Continued weakness and volatility in commodity prices resulting notably from a more uncertain and challenging outlook in China may put additional pressure on operations, credit measures, and free cash flow," S&P said.

It (Other OTC: ITGL - news) added that credit metrics for Glencore were relatively weak for the 12 months to June 30 while spot prices for some commodities were below its price assumptions.

However S&P affirmed Glencore's long-term corporate credit rating at 'BBB' and its short-term rating at 'A-2', and noted the company's efforts to strengthen its credit profile by focusing on debt reduction and cost cutting measures.

Last week, S&P warned BHP Billiton (NYSE: BBL - news) 's investment-grade credit ratings might come under pressure in the current financial year. (Reporting by Swati Pandey; Editing by Richard Pullin)