* FTSE 100 down 0.2 pct at 6,453.46 pts
* Index closes well off intra-day low
* BHP, Glencore Xstrata, CRH lead selloff in material stocks
* Iveagh would buy into 5-10 pct fall if bond yields
(Updates at close to reflect late market recovery, adds volume)
By Francesco Canepa
LONDON, Aug 20 Britain's top share index edged
lower on Tuesday as gloomy earnings reports fuelled
profit-taking on some basic material and energy stocks and
investors cut positions in expectation of less U.S. monetary
Shares in miners BHP Billiton's and Glencore Xstrata
fell 1.7 percent and 1.6 percent respectively as the
former announced a lower-than-expected profit and the latter
wrote down the value of its mining assets due to sliding metal
They led a selloff in the pan-European STOXX 600 Basic
Resources index, which was hit by profit takers after it
rose 16 percent since early July and saw its 12-month forward
price/earnings ratio, a key valuation metric, rise to levels not
seen since 2010.
Despite the recent rebound, which was fuelled by signs of
resurgent economic growth in Europe and the United States,
mining companies remain under pressure from cooling demand from
the world's top consumer, China.
"I've been recommending lightening up on the miners for the
past two or three weeks," Mike Franklin, head of investment
strategy at Beaufort Securities, said. "At the moment there's a
lot of uncertainty around (China) and people are quite happy to
lock in their profits."
Also weighing on the material sector, which encompasses
companies that focus on metals and basic resources, was building
supplies company CRH, down 2.2 percent after it cut its
full-year earnings outlook.
John Wood Group, down 8 percent, was the top blue-chip
faller as the energy services company warned that weakening
business and project delays would impact earnings growth for the
rest of this year and into 2014.
Material and energy stocks knocked a combined 8.3 points off
the FTSE 100, which ended 12.3 points lower, or 0.2
percent, at 6,453.46 points
The FTSE has fallen around 3 percent since the start of the
month, echoing a sharper selloff in U.S. Treasuries, as
investors factored in expectations that the U.S. Federal Reserve
will start scaling back its bond-purchase programme, which has
helped the FTSE rise 22 percent since June 2012.
Traders will be seeking clues on when the programme may be
trimmed when minutes of the Fed's July meeting are issued on
Wednesday, with many expecting the reductions to start in
Beaufort's Franklin believes the index could fall to 6,300
in the coming weeks, a 2.4 percent drop from current levels.
Chris Wyllie, chief investment officer at wealth manager
Iveagh, said he would buy into a dip of 5 to 10 percent in the
FTSE provided yields on U.S. Treasuries stabilised, which he saw
happening at around 3 percent, from 2.8 percent currently.
The FTSE climbed above psychological support at 6,400 and
6,450 points, showing some investors were already prepared to
buy into the market's dip and sending a bullish signal in the
very short term.
Defensive shares such as healthcare and telecoms led the
recovery in late trade, while cyclical stocks, which have been
the primary beneficiary of the Fed-fuelled rally, such as
financials and miners remained firmly lower.
Trading was relatively thin, with volume at 87 percent of
the FTSE's 90-day average.
(Additional Reporting by Tricia Wright; editing by Ron Askew)