Britain's FTSE edges lower as miners are hit by Rio resignation

Thu Jan 17, 2013 7:44am EST

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By Alistair Smout

LONDON, Jan 17 (Reuters) - Britain's blue-chip shares edged lower on Thursday, dragged down by miners after heavyweight Rio Tinto said its chief executive is to quit and its 2012 results will be hit by a $14 billion charge.

Miners and commodities companies provided three of the FTSE 100's four biggest fallers and took 7.7 points off the index, pulling it into negative territory after Rio Tinto announced the non-cash impairment charge and CEO Tom Albanese's resignation. The charge related to problems in Mozambique and its aluminium assets.

"The biggest news of the day is Rio's impairment charges and the top man stepping down, that's why Rio's down ... and the miners are all following each other lower," Northland Capital Partners broker Ian Jones said.

The FTSE 100 was down 2.95 points, or 0.1 percent, at 6,101.03 by 1147 GMT, having fallen as much as 0.3 percent in morning trade.

Rio Tinto was down by 1.4 percent, paring earlier falls of up to 5 percent after several banks issued notes saying that the miner's dip provided a buying opportunity.

"We believe the market will perceive today's write-downs and management changes negatively in the short term, but that these will be positive for the stock and the sector longer term," analysts at Citi write in a note, upgrading the stock to "Buy" from "Neutral".

"We believe today's announcement could significantly realign Rio Tinto with shareholder interests through reduced M&A and reduced capex spend."

The mining companies index was down 1.1 percent, with miners the biggest fallers on the blue-chip index. They had risen 20 percent between the middle of November and the beginning of January, but have shed 6 percent as the initial euphoria over a deal to avert fiscal crisis in the U.S. has waned.

Miners had been a key driver of gains of 9 percent for the broader index since mid-November, but the FTSE has also eased, losing 0.6 percent in the past three days.

"I'm very positive on equities, but in the near term there's genuine cause for a little concern and consolidation, just because we had such a strong end to the year," said Robert Quinn, the chief European equity strategist at Standard & Poor's Capital IQ.

"But I think that if the market comes off a little, it's a nice buying opportunity."

One example of a recent buying opportunity was banks , which gained 0.5 percent after recent declines, with investors awaiting more Q4 earnings from the United States.

They are up more than 1.6 percent since the previous session's lows, boosted by forecast-beating earnings from both JPMorgan Chase and Goldman Sachs on Wednesday. Citigroup and Bank of America Corp post numbers on Thursday. (Editing by David Goodman)

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