* FTSE down 0.1 percent at midday
* Traders take profits on 17-month highs after FOMC minutes
* Fresnillo suffers downgrade, gold price hit
* BP benefits as Transocean settles with U.S. Justice Dept.
By Alistair Smout
LONDON, Jan 4 Britain's top shares edged lower
on Friday as investors took profits following a new year surge
to 17-month highs and after the Federal Reserve signalled its
stimulus programme may be finished by the end of the year.
Precious metals miner Fresnillo led fallers, down
5.7 percent, with traders citing a downgrade by UBS and a
weakening gold price as the prospect of an end to monetary
stimulus undermines demand for gold as an inflation hedge.
The materials sector, which includes miners and commodity
stocks, took 10.5 points off the FTSE 100, pushing it
into negative territory. Miners lost 1.5 percent.
"Miners were up 20 percent from mid-November, so they've had
a very strong run, having been one of the weak performers for
last year," said Nick Xanders of European equity strategy at
brokerage BTIG. "With what the Fed is saying, it reminds people
that there are still U.S. risks out there, which provides an
excuse to take profits."
At 1138 GMT, the FTSE 100 index was down 2.93 points, or 0.1
percent at 6,044.41, having closed 0.3 percent higher on
Thursday at another 17-month high, extending Wednesday's 2.2
Minutes from the Fed's December policy meeting released late
on Thursday showed some voting members of the Federal Open
Market Committee were increasingly worried about the potential
risks for financial markets of the U.S. central bank's asset
The Fed said last month it would keep interest rates near
zero until unemployment - expected to have stayed steady at 7.7
percent in December - fell at least to 6.5 percent, as long as
inflation does not rise above 2.5 percent.
Xanders said that in the longer run an end to asset
purchases with new money, known as quantitative easing, could be
an encouraging sign.
"The Fed is saying that if the economy gets better, it won't
need the QE, and they'll slowly wean the market off it. It's a
question of which you would rather have: continued life support
or signs that the patient is improving."
Cyclical stocks, such as miners and banks
which rise and fall with the economic cycle, were the main
fallers as a withdrawal of support from asset-buying programmes
could hurt the global economy.
The energy sector, however, bucked the weaker
trend for cyclicals, buoyed by gains in BP which was the
top blue-chip riser, up 1.5 percent, and alone added over 4.5
points to the FTSE 100 index.
Switzerland-based rig contractor Transocean has
agreed to pay a lower-than-expected $1.4 billion to settle U.S.
government charges over BP's massive Gulf of Mexico oil spill in
2010, with the firm admitting that its crew on the Deepwater
Horizon was partly responsible. Last year, BP reached a $7.8
billion plaintiffs liability settlement.
"We believe that it could be difficult to pursue a 'gross
negligence' case against BP when the main contractor at the well
is simply pleading guilty to 'negligence'," Exane BNP Paribas
said in a note, reiterating its "outperform" rating on BP.
"We continue to see BP as a key restructuring story in the
Oils space with a compelling valuation."
(Additional reporting by Jon Hopkins; Editing by Catherine