City in red as mining stock losses fuel recovery fears

The FTSE 100 Index was dragged lower by commodity stocks yesterday as results from blue-chip miner Eurasian Natural Resources fuelled fears over the recovery.

The Kazakh miner was the London market's worst performer with a 4 per cent fall after profits rose, but the group warned over lower metals prices later this year and higher costs.

In a sluggish summer session the wider Footsie lost 47.68 points to 5302.87 as Wall Street's Dow Jones steadied the ship after early losses.

Hide Ad
Hide Ad

Oil prices fell to a five-week low yesterday as US government data showed inventories of crude and oil products rose to a record high in the world's top consumer the United States.

US crude oil futures fell $1.51 to $74.26 a barrel, having hit $73.83 earlier, the lowest price since early July.

ICE Brent fell $1.25 to $75.20, after flipping into a premium to the US benchmark on Tuesday.

Combined inventories of crude and refined products, excluding the Strategic Petroleum Reserve, reached 1.130 billion barrels last week, compared with the previous record of 1.127 billion barrels struck in September 1990, data from the US Energy Information Administration showed.

Hide Ad
Hide Ad

In the UK, BHP Billiton shares were 2 per cent down after it launched a 40 billion US dollars (25bn) hostile takeover bid for the world's biggest fertiliser producer – Canadian firm PotashCorp – following the rejection of an earlier proposal deemed "wholly inadequate" by the target. BHP followed ENR down, losing 66p to close at 1850p.

A bounce back for the pound against the dollar to 1.56 also served to dent metal prices, while sterling topped 1.21 against the euro.

The pound was helped after minutes of the Bank of England's latest August meeting showed no members voting for further boosts to the money supply, with rate-setters discussing policy moves in either direction. Meanwhile, a host of blue-chip heavyweights turned ex-dividend, meaning investors are not entitled to the latest payout.

The ex-dividend stocks included HSBC, off 147/8p to 6523/4p, Standard Life down 51/4p to 2083/8p and British American Tobacco 48p cheaper at 22321/2p. Property group Hammerson fell 53/4p to 3633/4p and Financial Times publisher Pearson lost 151/2p to 976p.

Hide Ad
Hide Ad

The pressure on BP shares in recent days continued as fears over the cost of litigation relating to the Gulf of Mexico oil spill left shares 103/8p down at 3975/8p.

Guinness drinks giant Diageo also slipped lower yesterday after analysts at Collins Stewart said the firm was due for a tough 2011 because of its dependence on markets with high unemployment. Shares were off 12p to close at 1093p.

But retailer Marks & Spencer made progress after drawing in more positive broker comment, as Arden Partners upgraded the stock from 'reduce' to 'neutral'.

Shares added almost 1 per cent, or 23/8p to 3411/4p, as Arden said it was impressed by recovery signs at the food business.

Hide Ad
Hide Ad

Elsewhere on the risers' board, British Airways made more progress after workers at airports operator BAA cancelled a planned strike earlier this week, lifting shares 41/4p to 2251/2p.

Transport group Stagecoach made healthy progress in the FTSE 250 Index after it reported a 7 per cent rise in like-for-like revenues at its South West Trains rail division.

With its North American coach arm also showing signs of recovery, shares lifted 25/8p to 1697/8p.

Rival National Express added 21/4p to 2243/4p.

The biggest Footsie risers were Inmarsat up 381/2p to 725p, Intertek ahead 71p to 1745p, Legal & General up 21/2p to 953/4p and Essar Energy up 9.7p to 408.6p.

The biggest Footsie fallers were ENR and BHP Billiton.

Related topics: