June 19, 2019 / 8:53 AM / 6 months ago

UPDATE 2-Miners, strong sterling drag down FTSE 100

* FTSE 100 down 0.5%, FTSE 250 down 0.3%

* Miners biggest drag after Rio Tinto’s output cut

* Ocado biggest blue-chip faller

* Saga at record low after poor trading update

* CYBG gains after Virgin Money rebrand plans (Adds news items, analyst comment, updates to closing prices)

June 19 (Reuters) - Britain’s main index slipped on Wednesday, weighed down by miners after Rio Tinto cut its forecast for shipments from an Australian region, while sterling’s gains ahead of Bank of England meeting dragged down exporters.

The FTSE 100 index dipped 0.5%, its worst fall this month, while the FTSE 250 midcap index was down 0.3%. The indexes handed back some gains from Tuesday after a dovish policy speech by European Central Bank chief Mario Draghi.

Anglo-Australian miner Rio Tinto fell 4.7% after it lowered its outlook for shipments from a hub in the Pilbara region in Australia due to a higher proportion of certain lower grade products.

That had a knock-on effect on rivals as well, dragging the sectoral index nearly 3% lower to its worst day in more than six months.

Online grocer Ocado fell nearly 6% to the bottom of the FTSE 100 index with a trader saying it was because of negative sentiment stemming from a media report on stiff competition in the quick delivery industry as Amazon.com tied up with Morrison.

Upmarket food retailer Marks and Spencer dropped 4.5% after Tesco said it was considering a trial of an upmarket convenience store under the “Tesco finest” banner.

British American Tobacco, Unilever and Reckitt Benckiser, which get a chunk of their revenue in U.S. dollars, weakened as the pound rallied before the BoE policy meeting where it might strike a relatively more confident tone than its counterparts.

All eyes are now on the conclusion of the U.S. Federal Reserve’s two-day meeting after markets close.

British Airways owner IAG fell 3.2%, after earlier touching a two-and-a-half-year low, and easyJet dropped 2.6%. HSBC downgraded the stocks after German airline Lufthansa’s profit warning this month.

“We are increasingly cautious towards European airlines ... expect many will follow Lufthansa’s profit warning,” HSBC analysts wrote. They also forecast weakness in long-haul and corporate travel demand in Europe.

Online takeaway service Just Eat lost 3.7% after a rating cut by UBS.

British American Tobacco and Imperial Brands weakened after Nielsen data indicated that UK retail cigarette sales fell in May.

Among midcaps, insurance and tourism firm Saga plunged 12.1% to a record low after warning that its tour operations were still being undercut by political uncertainty in Britain.

Fashion retailer Ted Baker slumped 9% to a record low after HSBC slashed its price target by more than half to lowest compared to other brokerages.

Clydesdale and Yorkshire Banking Group, however, jumped 6.2% after the lender laid out plans to challenge Britain’s big banks, betting that a re-brand as Virgin Money will help it shake up the market. (Reporting by Muvija M and Yadarisa Shabong in Bengaluru Editing by Mark Heinrich)

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