Commodities rock FTSE as hits lowest level since April

BRITAIN’S leading share index was driven down by weakness in commodity issues and banks on concerns over global growth which countered results-driven gains by market heavyweight Vodafone.

At yesterday’s close, the FTSE 100 index was off 62.69 points, or 1.1 per cent, at 5,861.00, extending its losing streak to a fifth session. It ended below the 5,900 level for the first time since 19 April.

Miners were the worst blue chip performers as copper prices fell back after US housing starts and future home construction numbers slipped in April.

“Once again it’s a commodity sell-off that’s caused the market to suffer... Concerns about global growth remain on the menu and it’s simply not a palatable prospect for investors to have to stomach,” said Angus Campbell, head of sales at Capital Spreads.

Plumbing supplies group Wolseley, which has a big exposure to the US housing market, shed 2.9 per cent with US DIY retailer Lowe’s also cutting its outlook.

US blue chips were 1.1 per cent lower by London’s close, pressured by the weak data and by a negative outlook from Hewlett-Packard , the world’s largest technology company.

Tech blue chips also suffered in London, with chip designer ARM Holdings shedding 4.6 per cent as it hosted analyst and investor presentations on Tuesday.

Drugmakers were weak as well, led by GlaxoSmithKline, which shed 2.5 per cent after cautious comments from Morgan Stanley.

“It would look to take profits in its less favored stocks, such as GSK,” said one London-based trader.

Banks stayed under pressure due to European sovereign debt uncertainties. The chairman of euro zone finance ministers Jean-Claude Juncker suggested Greek debt could undergo a “soft” restructuring if Athens embarks on major reforms and accelerates privatisation to raise funds.

“We are all a bit jumpy about the Eurozone now, awaiting another fudge on Greece,” said David Morrison, market strategist at GFT Global.

Vodafone, the world’s largest mobile operator by revenue, gained 0.9 per cent, adding nearly 3 points to Britain’s top share index after surprising investors with an upbeat outlook and resilient full-year results.

Essar Energy was the top blue chip riser, up three per cent after issuing an upbeat trading update, and oil services firm John Wood Group added 0.3 per cent on news it will be added to the influential MSCI index.

But engineer IMI was the top FTSE 100 faller, down six per cent with traders citing disappointment that it will not be included in the MSCI, as some investors had expected.

Investors were also cautious after a jump in British consumer price inflation in April to its highest annual rate since October 2008.