Confidence wavers but the drug makers have the cure

RECENT confidence of a quick global economic recovery wavered yesterday, with commodity stocks down on weaker raw material prices but pharmaceuticals and telecoms gaining.<br /><br />&ldquo;The bulls have lost their swagger and after a week long stalemate, the bears appear to be winning the recovery debate. Financial markets have now broken out of last week&rsquo;s unusually tight trading range, but unfortunately this break out is going in the opposite direction to the one most people want,&rdquo; said David Evans, market analyst at<br /><br />The FTSE 100 closed 1.2 per cent, or 50.11 points, lower at 4,278.46.<br /><br />Volumes on the British benchmark were about 91 per cent of its 90-day average daily volume.<br /><br />Miners were the biggest drag on the index, although metal prices recovered earlier losses to trade up in the afternoon. <br /><br /><strong>Antofagasta</strong>, <strong>Lonmin</strong>,<strong> Xstrata</strong>, <strong>Rio Tinto</strong>, <strong>Kazakhmys</strong>, <strong>Vedanta Resources</strong> and <strong>Eurasian Natural Resources</strong> fell 6.5 per cent to 10.2 per cent.<br /><br />Softer crude also hurt oil producers, with <strong>BP</strong>, <strong>Royal Dutch Shell</strong>, <strong>BG Group</strong> and <strong>Cairn Energy</strong> losing between 0.8 and 3.6 per cent.<br /><br />The number of Britons claiming jobless benefit rose less than expected in May but the rise was still enough to push the unemployment rate to its highest in more than a decade. <br /><br /><strong>J Sainsbury </strong>was among the heaviest fallers on the index, down 5.7 per cent. Britain&rsquo;s third largest grocer raised about &pound;432m to accelerate its expansion, as it posted first-quarter sales at the top end of expectations. <br /><br />The move to place new shares and convertible bonds also dragged on peers <strong>WM Morrison </strong>and<strong> Tesco</strong>, which fell 1.7 and 1.6 per cent respectively.<br /><br />Banks were also weaker, with<strong> Barclays</strong>, <strong>Royal Bank of Scotland</strong> and <strong>Lloyds Banking Group</strong> down 2.5 per cent to 3.2 per cent. But<strong> HSBC</strong> advanced 0.7 per cent.<br /><br />The UK index, which is down 3.5 per cent this year, has rallied 23.6 per cent since hitting a six-year trough on 9 March.<br /><br />Defensive pharmaceuticals stocks were in demand on Wednesday, with <strong>Shire</strong> up 1.6 per cent on expectations its drug Replagal will benefit from production problems at US rival Genzyme.<br /><br />Within the sector, <strong>AstraZeneca</strong> and <strong>GlaxoSmithKline</strong> added 2.5 and 0.7 per cent respectively.<br /><br />Index heavyweight <strong>Vodafone</strong>, also seen as a defensive stock, put on 3.7 per cent.