Britain’s FTSE 100 fell yesterday to a six-week low as concern that Britain and the United States would soon tighten monetary policy pulled down mining and energy stocks, as well as companies exposed to the UK property market.
Shares in basic materials and energy companies knocked a combined 35 points off the FTSE 100, which tumbled 66.56 points, or one per cent, to 6,639.71 points, its lowest close since 13 August.
Comments from Bank of England governor Mark Carney saying a UK rate increase was getting closer did not help sentiment. Nor did Dallas Federal Reserve president Richard Fisher saying in Rome that the US central bank could raise rates “sooner rather than later”.
Mining shares were lower on fears of a slowdown in demand from key consumer China, which knocked back metal prices. Anglo American lost 3.70 per cent to 1,407p, while Fresnillo fell 3.55 per cent to 748p.
Royal Mail narrowly missed closing below 400p for the first time, losing 3.47 per cent to exactly that level. It was hit by a disappointing update from rival UK Mail, which plummeted 13.27 per cent to 490p.
Property group Hammerson slipped 3.68 per cent to 563p after unveiling a surprise fundraising of £399m. Hammerson placed 71.3m new shares at 560p each with institutional investors, to help buy out its joint venture partner in the Highcross shopping centre in Leicester, as well as to expand in Europe.
However, Direct Line added 0.47 per cent to 298.5p after the disposal of its Italian and German operations to Spain’s Mapfre for a better than expected €550m (£430m). The company said most of the net proceeds were likely to be returned to shareholders.
Among the mid-caps, chipmaker CSR climbed 5.01 per cent to 765p after US suitor Microchip Technology was given more time to try and hammer out an agreed deal. Cairn Energy was 1.77 per cent up at 184p as it sold a 10 per cent stake in its North Sea Catcher and adjacent fields to Dyas UK.
Mitchells & Butlers – tipped by some as a possible bidder for rival Spirit Group – lost 7.86 per cent to 373.70p after a disappointing trading update, blamed on a rainy August. Spirit closed up 5.49 per cent to 96p.
But it’s not all bad news. The FTSE looks set to shrug off Tesco’s accounting debacle and uncertainty over next year’s election to hit a record high by the end of the year, a Reuters poll of 50 traders found.