Rally ends as weak miners nudge FTSE down slightly

THE FTSE 100 edged down yesterday, with investors booking profits from hefty gains in miners and banks last week, while the market searched for direction as the earnings season tailed off.<br /><br />The index ended down 0.2 per cent, or 9.36 points at 4,722.20, not far from a 10-month closing high of 4,731.56 on Friday.<br /><br />A recovery in corporate earnings and improving macroeconomic data has fuelled a market rally over the past few weeks, with the index rebounding 36 per cent since the all-time low in March, and has gained 2.5 per cent so far this month.<br /><br />Miners were the biggest drag on the index, with <strong>Anglo American, Fresnillo, BHP Billiton, Kazakhmys</strong> and <strong>Eurasian Natural Resources</strong> off between two and four per cent.<br /><br /><strong>Rio Tinto</strong> shed 3.2 per cent after China stepped up espionage allegations against the world&rsquo;s second-largest iron ore miner.<br /><br /><strong>Xstrata</strong> lost 3.1 per cent after the company said on Sunday that it could sell a major stake in a South African mining project.<br /><br />Banks were also under pressure after investor confidence was dented by a talk about a possible share issue by <strong>Lloyds Banking Group</strong>. The lender was the biggest large-cap faller, losing 4 per cent.<br /><br /><strong>Royal Bank of Scotland</strong> was off 3.6 per cent after its glum results on Friday and <strong>Barclays</strong> lost 1.8 per cent. <strong>Standard Chartered</strong> and <strong>HSBC</strong> rose 0.6 and 0.3 per cent respectively.<br /><br />Oil majors were higher as crude prices climbed above $71 a barrel. <strong>BP</strong> and <strong>Tullow Oil</strong> climbed 1 and 1.5 per cent, but <strong>Royal Dutch Shell</strong> fell 0.4 per cent.<br /><br /><strong>Friends Provident</strong> rose 7 per cent to top the gainers list, after the firm said it had agreed to fresh talks with Resolution.<br /><br />Peer <strong>Prudential</strong> climbed 3 per cent, helped by speculation that the company is set to raise its dividend with its results on Thursday. Old <strong>Mutual, Standard Life</strong> and <strong>Legal &amp; General</strong> were between 0.6 and 1.6 per cent higher.<br /><br />Pharmaceuticals were in favour, reflecting a retreat in risk appetite, as investors opted for assets perceived as safe bets. <strong>GlaxoSmithKline</strong> added 1.2 per cent, while <strong>Shire</strong> was up 1 per cent. <strong>AstraZeneca</strong> was 0.2 per cent lower.<br /><br /><strong>Rexam</strong> rose 2.8 per cent as Credit Suisse raised its recommendation to &ldquo;outperform&rdquo; from &ldquo;neutral&rdquo;.<br /><br /><strong>BT Group</strong> was up 2 per cent after JPMorgan raised its rating for the fixed line telecoms group to &ldquo;overweight&rdquo; from &ldquo;neutral&rdquo;.<br /><br />In economic news, a survey showed British firms had an easier time getting credit in the last three months &ndash; the first improvement this year &ndash; and access to credit is seen getting even better in the next three months.<br /><br />Investors will be focused on the Federal Reserve&rsquo;s statement tomorrow at the end of its two-day interest rate setting meeting.<br /><br />The central bank is expected to hold rates near zero and investors will be looking for signals of an exit strategy from its efforts to prop up the financial system.