Drop in mining shares extends UK’s losing run

LONDON REPORT

THE FTSE 100 fell yesterday, weighed down by mining stocks, with traders citing some anxiety ahead of the outcome of a US central bank meeting.

The FTSE 100 ended down 8.62 points, or 0.1 per cent, at 6,432.70, declining for a fourth consecutive session – a run of losses not seen since November 2012. Mining stocks, among the most sensitive to market nervousness, were left nursing a 0.8 per cent drop.

ENRC was among the worst off, down 1.9 per cent in trading volume at more than 1-1/2 times its 90-day daily average, after the Kazakh miner took a larger than expected $1.5bn charge, dragging it to a loss in 2012.

Peer Anglo American was the biggest laggard on the FTSE 100, off 2.6 percent as the stock, alongside Aviva, HSBC and InterContinental Hotels, traded without the attraction of its latest dividend.

In all, companies trading ex-dividend exerted downward pressure on the FTSE 100 index to the tune of 11.78 points.

“A slight bit of caution before the completion of the Fed meeting... Although they're not likely to change any policy at all, investors are just worried whether there will be a shift towards a slightly more hawkish disposition or not,” Chris Beauchamp, market analyst at IG Index, said.

The US Federal Reserve released its policy statement last night.

Markets expected the Fed to maintain its $85bn monthly bond-buying stimulus effort but closely monitored Bernanke’s comments for signals on how long the policy will continue.

“The rhetoric will change at some point but we need to see some good solid growth numbers at the same time,” Mike Allen, fund manager at Momentum, said.

“I don't think they are going to spook the market by suggesting that QE is going to be withdrawn any earlier than the original guidance from them.”

Providing support was optimism that European policymakers would contain Cyprus’s financial crisis after MPs there voted down a rescue plan.

The European Central Bank said after the vote it remained committed to providing liquidity within certain limits.

Chancellor George Osborne’s Budget statement failed to spark much reaction from the equity market, though strength was seen from UK housebuilders after he announced a new plan to help struggling home buyers.

Barratt Developments posted the strongest gains, ahead 6.6 per cent, while Taylor Wimpey, Redrow, Bellway and Persimmon added 4-6.1 per cent, helping prop up the FTSE 250, which saw a flat close.