FTSE down as mining shares fall
Britain’s leading share index edged lower yesterday with weakness in commodity issues countering strength in defensive issues as investors’ risk appetite faded.
At the close, the FTSE 100 index was down 10.81points, or 0.2 per cent, at 5,661.59, having earlier touched its lowest level in a week below the 5,600 level.
Miners Xstrata, Kazakhmys, and Lonmin were among the top blue chip fallers, down 2.1 to 2.6 per cent, as metal prices eased with a strengthening dollar on short-covering as investors awaited likely indications there will be fresh quantatitive easing from the US Federal Reserve.
“The market remains nervous as likely quantitative easings, while providing a positive boost, will reinforce worries over the global recovery, raising demand concerns for commodities,” said Mic Mills, head of electronic trading at ETX Capital.
The Fed said after its 21 September meeting it was prepared to provide more support for the economy but expressed concern about low inflation.
US blue chips were 0.2 per cent lower ahead of the Federal Open Market Committee (FOMC) minutes release, also impacted by China’s latest bid to cool down the world’s second biggest economy.
The Chinese government raised bank reserve requirements by 50 basis points, the fourth hike this year, due to excessive lending, an official Chinese newspaper reported.
Crude prices slipped for a second day on yesterday as Saudi Arabia signalled OPEC would maintain current production levels at the group’s meeting and as the dollar rallied.
Oil majors BP and Royal Dutch Shell both shed 0.7 per cent.
Oil exploration stocks were dealt a sobering blow as mid cap Soco International plunged 18.8 per cent on news it would abandon its Vietnamese appraisal well.
Blue chip Cairn Energy lost 2.7 per cent.
Banks were among the top blue chips gainers led by Standard Chartered, up 2.1 per cent, as traders cited talk that JPMorgan was interested in making a takeover approach.