SYDNEY, Sept 3 (Reuters) - Standard & Poor's on Thursday cut its outlook for Glencore Plc GLEN.L 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 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 (LONDON:BLT)'s BHP.AX investment-grade credit ratings might come under pressure in the current financial year.