Fall in mining stocks pegs back UK's FTSE

Fri Jul 11, 2014 10:30am EDT

* FTSE flat, had fallen for last 4 days

* Imperial Tobacco and BAT buoyed by merger activity

* Mining stocks retreat as copper price dips

By Sudip Kar-Gupta

LONDON, July 11 (Reuters) - Britain's top equity index made little progress on Friday, as weaker mining stocks offset a rise in tobacco shares and threatened a fifth consecutive day of losses for the index.

The blue-chip FTSE 100 index, which had fallen for the last four days, was flat at 6,674.52 points, going into the end of the trading day.

A decline in mining stocks such as Rio Tinto , Anglo American and Randgold took the most points off the FTSE 100.

Traders attributed the fall in the sector to a dip in the price of copper along with concerns about a possible slowdown in China, the world's biggest consumer of metals and which reported weaker-than-expected June export data earlier this week.

The weaker mining stocks offset gains in Imperial Tobacco and British American Tobacco, which were boosted after Imperial said it was in talks to buy some brands from Reynolds and Lorillard as part of a merger plan confirmed by the two U.S. companies.

The two British tobacco stocks also benefited from their "defensive" characteristics of stable profits and dividends, often favoured by investors during times of market uncertainty.

Financial markets have been unsettled this week by problems with Portuguese bank Banco Espirito Santo, and IPR Capital director Steven Mayne backed selling or "shorting" any advances by the FTSE 100.

"Political and economic unrest could quickly move the market lower, so I would look to short any rallies," said Mayne.

The FTSE's retreat since the start of July has pushed it down from peaks reached in late May, which took the index close to record highs.

Some traders expect it to remain stuck in its recent trading range, between a high just below 6,900 points and lows around 6,600, through the next month.

"I still think that 6,900 is achievable by the year end, but for the moment, it's a bit risk-off," said Novum Securities' technical strategist Adrian Slack. (Additional reporting by Tricia Wright; Editing by Larry King and David Holmes)