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Britain's FTSE dips as miners get hit by weaker prices
February 18, 2013 / 11:46 AM / 5 years ago

Britain's FTSE dips as miners get hit by weaker prices

* FTSE 100 index falls 0.1 percent

* Commodity-related stocks take 5.9 points off the index

* U.S. markets shut, congressmen recess before cuts deadline

* Index set to retest 5-year highs despite short-term risks

By Alistair Smout

LONDON, Feb 18 (Reuters) - Weak commodity prices meant miners led Britain’s top shares lower on Monday but the benchmark FTSE 100 index remained set to test five-year highs despite short-term caution among investors.

The mining sector weas the main drag on the FTSE 100, losing 0.8 percent after copper fell to a three-week low, with copper miner Antofagasta losing 3 percent, leading the index’s fallers.

Last Friday, gold fell to a 6-month low, hitting miners such as Fresnillo, which was down 1.2 percent in Monday’s session.

“The miners have been underperformers, and with gold, silver and copper coming off, that’s not going to help the sector at large,” Zeg Choudhry, head of trading at Northland Capital Partners, said.

“But it’s not particularly risk-off; underneath, the market feels okay. The bias is still to the upside, but with the U.S. closed today, we’re drifting in the wind.”

The FTSE 100 was down by 4.36 points, or 0.1 percent lower, at 6,323.90 points at 1128 GMT, with the materials sector - which includes commodity-related stocks such as miners - taking 5.9 points off the index, enough to take it into negative territory.

The session was expected to be a quiet one with little macroeconomic and corporate data and with the U.S. equity market closed for the President’s day holiday.

Lawmakers in the United states started a ten day holiday, leaving four days for members of Congress to negotiate a deal to avoid automatic budget cuts due to kick in at the beginning of March.

“With the Senate in recess this week there’s really no time left to come up with a compromise ahead of the March 1 deadline for federal budget cuts,” said Fawad Razaqzada, market strategist at GFT Markets.

“That said, there’s little universal conviction that ‘the end is nigh’ for this rally with investor sentiment being reported as strong even if there are some short-term concerns creeping in.”

Appetite for M&A, which comes with improved sentiment, supported free-to-air broadcaster ITV, which topped the list FTSE 100 risers.

It climbed 3.2 percent with traders citing the uplift in recent M&A activity in the sector in general helping boost the credentials of the perennially rumoured takeover target. Earlier this month, Liberty Global struck a deal to buy British cable TV company Virgin Media .

Despite resilient sentiment in the market, early 2008 highs of 6,400 have proved a tough level for the FTSE 100 to breach this year.

The index topped out at an intraday high of 6,384 on Feb. 13, but technical analysts said that the index could be priming itself for another attack soon.

“The ability to hold the uptrending support line near 6294.00 suggests that the index is poised for another move to the upside with 6400.00 the next likely target,” James Hyerczyk, analyst at Autochartist, said.

Additional reporting by David Brett and Sudip Kar-Gupta/editing by Chris Pizzey, London MPG Desk, +44 0207 542-4441

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