FTSE nudges down as mining stocks weigh
The FTSE 100 index edged lower by mid-session on Friday after hitting a new six-year closing high in the previous session, as mining and oil stocks were weighed down by weaker commodity prices.
Oil stocks led the FTSE 100 losing sector with crude prices easing below $58 a barrel as some investors focussed on forecasts for milder weather in the world’s top energy consumer, the United States, that could curb heating fuel demand.
Index heavyweights BP and Royal Dutch Shell slipped about 0.4 percent.
By 11:29 a.m., the FTSE 100 was down 9.5 points, or 0.15 percent at 6,423.8, having ended Thursday 0.19 percent up at 6,433.3 points. European shares were also weaker.
But analysts remained bullish on the FTSE 100.
“We believe there is a very good chance that the market will hit an all-time high at the end of this year. We have a target of 6,850,” said Robert Parkes, UK equity strategist at HSBC.
The index has a lifetime high of 6,950.6.
“The key drivers are still in place. Profitability is still very strong in the UK, valuations remain on the low side especially in the large cap space, and merger and acquisition activity remains the key driver this year,” Parkes said.
Kingfisher rose 2.9 percent, topping the gainer chart after HSBC raised its price target for Europe’s largest home improvement retailer, while Next gained 1.6 percent after Goldman Sachs lifted its rating on the retailer to “buy” from “neutral”.
But with little corporate and economic data on the calendar, investors will look to the U.S. market and data — producer price index, housing starts and University of Michigan consumer sentiment survey — for market direction later in the day, traders said.
MINERS TAKING CUE FROM CHINA
Mining shares suffered on slightly weaker copper prices after China took further steps to cool its booming economy.
“If it’s pointing to slightly slower growth in China, you would have expected an impact on commodity prices. Obviously China is a very big consumer of commodities,” Parkes said. “It seems the two factors are linked.”
Beijing tightened its grip on credit yet again to prevent a torrent of cash generated by record trade surpluses from fuelling an unwanted rebound in capital spending.
Vedanta Resources slumped 2.5 percent, Rio Tinto shed 1.2 percent, Antofagasta dipped 0.6 percent and Kazakhmys lost 0.2 percent.
Traders also said miners had had a strong run recently and that investors were booking profits.
Drugmakers, however, lent support to the UK benchmark index after Citigroup lifted its price target on GlaxoSmithKline, which gained 1.4 percent. Rival AstraZeneca put on 1 percent.
Compass climbed 1.7 percent after the world’s biggest caterer said trading in the first four months of its financial year had been encouraging and marginally ahead of expectations.
Reed Elsevier slipped 1.6 percent after gaining 6.6 percent in the previous session after the Anglo-Dutch publisher said it planned to sell off its education arm.
Source: uk.biz.yahoo.com
