Vodafone and weak mining stocks weigh on UK's FTSE

Tue Mar 18, 2014 7:29am EDT

* FTSE 100 falls for 7th time in 8 sessions

* Fall in gold price impacts Fresnillo and Randgold

* Vodafone slips as Fitch warns of credit rating cut

By Sudip Kar-Gupta

LONDON, March 18 (Reuters) - Britain's top equity index fell for the seventh time in eight sessions on Tuesday, hovering near its lowest level in more than a month as telecoms group Vodafone and mining stocks weighed on the market.

The blue-chip FTSE 100 index, which rose 14.4 percent in 2013 to post its best annual gain since 2009, was down by 0.2 percent, or 12.96 points, at 6,555.39 points in mid-session trading - near its lowest level since early February.

A 1.6 percent fall for Vodafone took the most points off the FTSE, as credit rating agency Fitch warned it could cut the company's rating if Vodafone bought Spain's largest cable operator Ono without taking other measures to reduce its debt.

Oriel Securities also downgraded Vodafone to "reduce" from "hold" in the wake of Vodafone's Ono deal, with Oriel voicing some scepticism over the merits of the takeover, which was announced on Monday.

A fall in gold mining stocks, such as Fresnillo and Randgold Resources, also had a negative impact.

The gold miners' decline tracked a fall in the price of gold itself.

Gold, which is considered a safe-haven asset in times of economic uncertainty, had risen in the wake of geopolitical tensions after Russia's effective seizure of the Crimea region, but it edged back on expectations that divisions between Western powers and Russia over Crimea would not escalate too much.

IG chief market strategist Brenda Kelly said some traders had welcomed the fact that the United States and the European Union had imposed personal sanctions on only a handful of officials from Russia and Ukraine.

"There is still a sense of relief in the market that the sanctions were individual rather than economically based, so the safe haven of gold is less in demand," said Kelly.

Logic Investments' trading director Darren Easton said he would only buy back into the FTSE 100 if it rose and held above the 6,600 point level, and added the index remained vulnerable to further falls that could push it down to around 6,400 points.

"If it does not get back above 6,600, I'll leave it alone for now," he said.

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