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FTSE steadies, weaker miners offset bank rally
July 30, 2014 / 11:21 AM / 3 years ago

FTSE steadies, weaker miners offset bank rally

* FTSE 100 index steadies by midday

* Barclays leads banks higher

* Antofagasta drags down miners

By Atul Prakash

LONDON, July 30 (Reuters) - Britain’s top equity index steadied by midday trading on Wednesday, as a rally in banking stocks spurred by Barclays’ earnings report was offset by weaker miners.

Barclays rose 4.2 percent after saying it had made good progress in cutting costs and hiving off assets. However, its underlying profits fell 8 percent in the second quarter as its attempts to crack down on high-risk trading and subdued market activity hit its investment banking.

The bank added the most points to the blue-chip FTSE 100 index after some analysts said the drop in investment banking revenue was less severe than they predicted. The UK banking index rose 1.3 percent.

“There was a lot of caution ahead of Barclays’ results, but it was no worse than many analysts were expecting. Lower operating costs are generally positive for banks in the current environment,” Hargreaves Lansdown analyst Keith Bowman said.

Earnings news also helped Travis Perkins, up 3.5 percent, after Britain’s No. 1 supplier of building materials posted a 19.4 percent rise in first-half profit, helped by improving market conditions and increased customer confidence.

However, the broader FTSE 100 index hovered around the previous session’s closing level despite strong gains recorded by some individual companies. The index was down 0.04 percent at 6,805.07 points by 1059 GMT, with a drop in mining shares weighing on sentiment.

The UK mining index fell 0.8 percent, led lower by Antofagasta after the Chilean miner announced its results. Shares in Antofagasta were down 2.3 percent, the top faller on the FTSE 100 index.

Antofagasta, which like others in the copper sector is battling declining ore grades, rising costs and weak metal prices, posted a 5 percent quarter-on-quarter increase in its second-quarter copper output, slightly ahead of forecast.

However, the miner’s production dropped 4.4 percent in the first half of 2014 from a year earlier, mainly due to falling copper grades.

Chris Beauchamp, market analyst at IG, said that investors fretted about the rationale for increasing the miner’s copper output at a time when the broader market was expected to record ongoing surpluses.

“Couple that with rising labour costs and it looks like a grim future for Antofagasta shares.”

Among other movers, British American Tobacco fell 0.8 percent, with the strong British pound and a slight decline in volume hitting its revenue and profit.

The broader market has come under pressure in recent months as the crisis in eastern Ukraine has threatened to boil over, most recently after Russian-backed rebels were blamed for the downing on July 18 of a Malaysian passenger jet over Ukraine. (Additional reporting by Alistair Smout; Editing by Susan Fenton)

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