Weak miners dent Britain's FTSE 100

Tue Jan 8, 2013 12:48pm EST

* FTSE 100 dips 0.2 percent
    * Miners fall ahead of China data, U.S. earnings
    * Vodafone rises on Verizon sale talk

    By Tricia Wright
    LONDON, Jan 8 (Reuters) - Britain's blue chip shares slipped
on Tuesday, hampered by profit taking on mining stocks ahead of
economic data from China, and as the U.S. corporate earnings
season came into focus.
    Miners shed 0.7 percent as investors, gearing
up for data out of top metals consumer China in the next two
weeks, including fourth-quarter GDP, moved to lock in profits.
The sector had rallied around 16 percent from a November trough.
 
    Societe Generale, in a note, said it reckons a hard landing
in China remains a real risk despite recent signs of economic
improvement.
    SocGen recommended playing this possibility by selling
European miners, as well as the tech hardware and personal goods
sectors - which also have high exposure to Asia - while buying
into media and food retail stocks.
    Investors were also wary as the fourth-quarter U.S. earnings
season gets underway, with figures due from Alcoa, the
largest U.S. aluminium producer, after the Wall Street close on
Tuesday.
    "There's maybe just a little bit of fear coming in with
regards to the reporting season which we are literally just
starting on in America," Alastair McCaig, market analyst at IG
Index, said.
    "With Alcoa being the aluminium producer it is, it does give
a relatively decent barometer of how the land might lie for the
likes of the automotives, aeronautical, manufacturers, housing
... and the miners."
    Anglo American bucked weakness in the sector as
investors welcomed news that Australian mining executive Mark
Cutifani had been appointed its chief executive. 
    Anglo shares, which have underperformed the sector by around
20 percent since the start of last year due to strikes, delays
and cost overruns, added 1.4 percent on the news. Many analysts
hope Cutifani's appointment will herald a review of the group's
underperforming assets and a restructuring of its portfolio.
    The FTSE 100 closed down 10.95 points, or 0.2
percent, at 6,053.63, extending declines from Monday when it
fell for the first time this year.
    However, this left the UK benchmark only a touch beneath
Friday's closing level, its highest in nearly two years, with
the index having chalked up a 2.6 percent gain so far this year.
    "It's not a time to book profits given that long-term
fundamentals still look incredibly attractive," Henk Potts,
market strategist at Barclays, said.
    "Corporate profitability continues to grow, valuations look
very cheap, and companies are awash with cash which results in
higher dividends and share buybacks, and merger and acquisition
activity - all of which create a pretty powerful mix of
positivity for equity market investors for 2013."
    Market heavyweight Vodafone helped limit the index's
losses as its shares rose 1.7 percent to 162.74 pence.
    Vodafone's partner in its U.S. joint venture, Verizon
Wireless, said it would be "feasible" to buy out the British
firm's stake in the business in what would be one of the biggest
corporate deals ever.
    Verizon Communications Chief Executive Lowell McAdam
told the Wall Street Journal "we have always said we would love
to own all of that asset", which is 55 percent owned by Verizon
Communications and 45 percent by Vodafone. 
    "There has been much negative news on VOD given the tough
outlook for European telecoms ... due to the macro environment,
but forward looking we see (it retesting) 191 pence," Atif
Latif, director of trading at Guardian Stockbrokers, said.
    "Should (Verizon Communications) make a move on the 45
percent stake, we see value on a standalone basis, and with the
shares offering a prospective yield of 7 percent coupled with
the defensive nature of the company we see the current valuation
as undemanding."
    Trading volume in Vodafone was robust, at 164 percent of its
90-day daily average, against the FTSE 100 index on 95 percent
of its 90-day daily average.    

 (Editing by Susan Fenton)