Oil stocks push FTSE 100 lower for second day in row
THE large cap index lost 2.1 per cent yesterday, dented by weakness in commodity stocks, banks and index heavyweight Vodafone, which traded ex-dividend.
At the close, the FTSE 100 was down 93.60 points at 4,383.42, albeit above the session low of 4,359.33.
Oil producers were the standout losers, retreating after recent gains in line with crude prices. BP, Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy dropped between 3.1 and 4.1 per cent.
The mining sector also suffered as metal prices went into reverse. Vedanta Resources, Xstrata, Anglo American, BHP Billiton, Rio Tinto and Antofagasta lost between 1.6 and 8 per cent.
Banks took another chunk off the index, with Barclays down 5 per cent, extending the previous session’ s 13.5 percent decline after Middle Eastern investor Ipic sold a more than 11 per cent stake in the bank.
HSBC fell 1 per cent as traders cited market talk of Saudi conglomerate Saad Group selling down its near 3 percent holding in Europe’s biggest bank.
Elsewhere in the sector, Royal Bank of Scotland, Lloyds Banking Group and Standard Chartered lost 1.6 per cent to 5.3 per cent.
Also on the downside, Vodafone sank 4.9 per cent as new buyers of its shares would not qualify for its next dividend. International Power, National Grid, Rexam and WPP also fell after going ex-dividend.
Britain’s service sector staged a surprise return to growth in May after an increase in new business and the most optimistic outlook since October 2007, the monthly services PMI survey showed.
Food retailers were in demand after Cazenove upgraded the sector to “neutral” from “underweight”. Tesco, Morrison Supermarkets and Sainsbury put on between 0.3 and 1.4 per cent. Morrison was also upgraded by Seymour Pierce ahead of a trading update due today.
BAE Systems added 1.7 per cent after Cazenove repeated its “outperform” rating on the defence contractor, maintaining that the stock “stands out as a value play at current valuation levels”.
Power station operator Drax advanced 1.1 per cent, boosted by an upgrade to “equal-weight” from Morgan Stanley.
But British Airways shed 3.8 per cent after the airline said it carried 6.5 per cent fewer passengers in May than in the same month last year, while business class traffic took another battering, with a 17.2 per cent decline.