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FTSE pulled lower by weak commodities, miners
November 26, 2010 / 9:01 AM / 7 years ago

FTSE pulled lower by weak commodities, miners

* FTSE 100 index down 0.4 percent

* Commodity issues weak as metal, crude prices reverse

* Banks under pressure on European debt concerns

* Kingfisher knocked by two broker downgrades

By Jon Hopkins

LONDON, Nov 26 (Reuters) - Britain’s top shares weakened in early trade on Friday, with mining stocks hit by falling metals prices and banks dogged by concerns about Europe’s debt crisis.

By 0844 GMT, the FTSE 100 index was down 20.64 points, or 0.4 percent, at 5,678.29, having ended 41.83 points, or 0.7 percent, higher on Thursday.

With Wall Street having closed for the Thanksgiving Day holiday on Thursday and set for a half day on Friday, volumes in London were light once again.

“There’s little for traders to get their teeth into today, so the blue chips are just drifting back with the same old stories providing a negative picture,” said Mic Mills, head of electronic trading at ETX Capital.

Miners were the worst blue-chip performers, led by BHP Billiton (BLT.L) and Rio Tinto (RIO.L), down 1.4 percent and 1.2 percent respectively, as metal prices took a tumble, reversing a recent rally on concerns about tightening trading conditions.

Rio Tinto said on Friday is to nearly triple its capital spending to $11 billion next year from about $4 billion in 2010 as it seeks to boost iron ore output by more than 50 percent over five years. [ID:nLDE6AO1KC]

Integrated oils were also a drag on blue-chip sentiment as the crude price CLc1 slipped, with BP (BP.L) and Royal Dutch Shell (RDSa.L) both down 0.4 percent.

Banks suffered as well, with Barclays (BARC.L) losing 1.7 percent, as worries about European sovereign dent contagion continued to weigh.

A majority of euro zone nations and the European Central Bank are encouraging Portugal to seek aid from a European rescue fund, the Financial Times Deutschland reported. [ID:nLDE6AO26F]

Geopolitical tensions in Asia also undermined investor sentiment, with North Korea saying that impending military exercises by the South and the United States are pushing the region towards war. [ID:nL3E6MQ058]

KINGFISHER NOBBLED

Among individual blue-chip fallers, DIY retailer Kingfisher (KGF.L) shed 1.5 percent. Traders cited the impact of a downgrade by BofA Merrill Lynch to “underperform” from “neutral” with an unchanged 230 pence price target.

Investec Securities also cut its stance on Kingfisher to “sell” from “hold” in a review of British general retailers in which it downgraded the sector overall to “underweight”.

But broker comment provided a lift for a small batch of blue-chip risers led by Weir Group (WEIR.L), up 2.9 percent, as Morgan Stanley started coverage of the engineer with an “overweight” stance and a 2,000 pence price target.

And telecoms giant BT Group (BT.L) took on 2.6 percent as Exane BNP Paribas hiked its target price for the firm by 20 percent to 265 pence, citing a strong first-half performance.

With no important domestic economic data due for release on Friday, traders were focused ahead to Wall Street’s post-Thanksgiving restart this afternoon to provide some badly needed direction. (Editing by Michael Shields)

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