* FTSE 100 down 0.2 pct at 6,604.21 pts
* Fresnillo tumbles 10.9 pct
* StanChart outperforms as update eases concerns
By Francesco Canepa
LONDON, Aug 6 Britain's blue-chip share index
fell in thin, volatile trade on Tuesday as a selloff in mining
stocks, led by Fresnillo, more than offset gains in
Shares in Fresnillo dived 10.9 percent in volume more than
twice their 90-day average after the precious metals miner cut
its dividend due to a fall in the price of gold. The shares have
now halved in value since December.
Gold miners are often bought by investors looking for a high
dividend yield at times of economic uncertainty when gold is
seen as a safe haven. A 25 percent decline in gold prices this
year has been exacerbated by signs of a pickup in growth in
developed economies, hitting gold miners' shares especially
Fresnillo peer Randgold Resources fell 5.5 percent
on Tuesday as gold prices continued to fall following upbeat
Material stocks, covering metals and other basic
commodities, knocked 15.1 points off the FTSE 100, which
ended down 15.4 points, or 0.2 percent at 6,604.21 points,
slipping further away from a two-month high of 6,696 touched
Volumes was thin at 90 percent of the FTSE's 90-day average,
causing trade to be volatile. The FTSE hit an intra-day low of
6,562.32 points before climbing back above its Monday's low at
around 6,600, seen as a key short-term support level.
"I think we are going to stay above 6,600 for now," said
Craig Erlam, a market strategist at Alpari.
He cited support from better economic data from Britain,
Europe and the United States and expectations the Bank of
England will state its intention to keep ultra-low rates for an
extended period of time when it releases its quarterly Inflation
Report on Wednesday.
Helping limit losses on the index were financial shares
Standard Chartered and Legal & General after
their first-half updates.
Shares in Asia-focused bank Standard Chartered
surged 2.9 percent in volume 230 percent their 90-day average as
management comments eased worries about the firm's exposure to a
growth slowdown in emerging markets.
That lured investors back into the shares after an 8 percent
fall in the past three months, including a 1.3 percent drop on
Monday when peer HSBC missed forecasts with its
"The results were less bad than expected," said Ivor Pether,
whose 408 million pound ($627.66 million) British equity fund at
Royal London Asset Management owns shares in HSBC and Standard
"There were a lot of concerns and probably a few short
positions expecting some negative comments about the emerging
market background (but Standard Chartered made) more upbeat
comments than HSBC."
Insurer Legal & General also rose, by 2.3 percent,
after its first-half report, which included a
larger-than-expected dividend increase.($1 = 0.6500 British
(Editing by Susan Fenton)