Oils and financials weigh on FTSE offsetting miners’ rally

BRITAIN’S leading share index retreated yesterday with a rally by miners more than offset by falls in oils and financials as investors fretted over Eurozone debt problems during a choppy session.

The FTSE 100 closed down 22.68 points, or 0.4 per cent, at 5,528.27, a level not seen since the middle of September.

The blue chip index recorded its worst monthly performance since June, shedding 2.6 per cent after a poor second half in a reversal from 29-month highs in early November.

Banks, seen as among the most vulnerable to continued European debt uncertainty, were the biggest blue-chip fallers yesterday.

Barclays came under the most pressure due to its exposure to the Iberian peninsula, losing 2.6 per cent after earlier touching a 12-month low.

“It is becoming increasingly apparent that if the contagion effect continues, the European authorities may not have the ammunition available to assuage concerns that the crisis won’t spread to Spain and Italy,” said Michael Hewson, market analyst at CMC Markets.

Other financials also suffered as investors shunned stocks perceived to be riskier, with insurer Standard Life down 3.7 per cent and fund manager Schroders off 2.1 per cent.

Insurance buy-out specialist Resolution was the top blue chip faller, down 3.8 per cent after JP Morgan Cazenove started coverage with “underweight”.

US blue chips were 0.4 per cent lower by London close, also unsettled by European debt concerns, but they rallied off earlier lows after Chicago PMI and US consumer confidence data proved better than expected.

Integrated oils were weaker as the crude price fell with a firmer dollar, with BP and Royal Dutch Shell both losing 0.5 per cent.

But Cairn Energy was up 2.4 per cent, as analysts highlighted the recent win of three new exploration licences for offshore Greenland.

Essar Energy was the top blue chip gainer, up 4.1 per cent ahead of the Indian energy firm’s inclusion in the MSCI World index from the close on Thursday. Weir, up 2.2 percent, also joins the MSCI index.

Miners rallied as copper prices moved higher after recent falls, helped by tight supplies. Rio Tinto and BHP Billiton added 0.9 per cent.

Gold prices set record highs in euro terms yesterday, with African Barrick Gold -- which on Monday said it had found more of the metal in Tanzania -- gaining 3.4 per cent.

And broker comment pushed cruise operator Carnival 2.1 per cent higher after an upgrade in rating by Numis.

Technical factors, however, still remained a negative for the FTSE 100 index.

“Since the start of November, the FTSE has been forming a clear downward trend ... The level of 5,550 looks key, which it looks to be testing at present, and should it break through this with conviction then you could be looking at 5,250 as a next target,” said Phil Gillett, a trader at Spreadex.