Metals lose their shine and oil slips on the strong dollar

LOWER commodities stocks and the firm dollar took the FTSE 100 lower yesterday, losing 2.6 per cent, or 115.94 points, to close at 4,326.01.<br /><br />Volumes were about 76 per cent of its 90-day average daily volume, but the index has risen 25 percent since hitting a six-year low on 9 March.<br /><br />&ldquo;The fundamentals of the economy are still pretty poor, still pretty shaky,&rdquo; said Philip Gillett, sales trader at IG Index. &ldquo;This correction has been on the card for a while.&rdquo;<br /><br />The dollar gained against a basket of major currencies, hitting commodity stocks. Oil majors <strong>BP</strong> and <strong>Royal Dutch Shell</strong> shed 2.1 and 4.2 per cent respectively.<br /><br />Among miners, <strong>BHP Billiton</strong>, <strong>Rio Tinto</strong>, <strong>Xstrata</strong>, <strong>Vedanta Resources</strong>, <strong>Kazakhmys</strong> and<strong> Antofagasta</strong> were down 2.8 to 7.2 per cent.<br /><br /><strong>Lonmin</strong> sank 9.8 per cent to be the biggest loser after the platinum producer shut down its main furnace on Sunday due to a production incident.<br /><br />Banks, which have rallied 105 per cent since those March lows, were other standout losers on the index, as the global economic outlook remained murky. <strong>HSBC</strong>, <strong>Royal Bank of Scotland</strong>, <strong>Barclays</strong> and <strong>Standard Chartered</strong> dropped 3.1 per cent to 5 per cent. But<strong> Lloyds Banking Group</strong> was one of the three gainers on the index, up 2.3 per cent. <br /><br />The European Central Bank (ECB) said eurozone banks would probably need to write down another $283bn (&pound;174bn) this year and next on bad loans and securities.<br /><br />Insurers in the euro region may face significant balance sheet stress ahead due to financial market turbulence and a weak economy, the ECB also said. UK-listed insurers <strong>Prudential</strong>, <strong>Standard Life </strong>and<strong> Aviva</strong> fell 3.2 to 4.5 per cent.<br /><br />The 16-country euro zone lost a record 1.22m jobs in the first quarter of 2009, highlighting the depth of recession and boding ill for any quick turnaround. <br /><br />But finance ministers of the G8 nations agreed over the weekend the global recovery was showing encouraging signs of stabilisation but recovery remained shaky, and they said they would consider how to unwind rescue steps.<br /><br />Among other individual movers,<strong> AstraZeneca </strong>put on 0.8 per cent after Citigroup upgraded the drugmaker to &ldquo;buy&rdquo; from &ldquo;hold&rdquo; and lifted its price target on the stock.<br /><br />Today&rsquo;s trading updates from <strong>Tesco</strong> and<strong> Whitbread </strong>are likely to have an impact on consumer-related stocks. Investors will be looking for any evidence that underpins recent murmurings about the recovery.