Yesterday's trading: Miners back down to earth

 

Miners lost some of their lustre following a downbeat circular from US giant Citigroup.

It believes the sector is due a well-deserved breather after the record breaking run of the past two months - fuelled by India and China's insatiable demand for the base metals that feed its booming industries.

The recent rally has added a startling £200bn to the market values of the world's top 14 miners, and the US investment bank reckons the sector could be ripe from some chunky profit taking in the near term.

Chilean copper miner Antofagasta, which has rallied by over 60% since the start of the year, slipped 24p to 829p after Citigroup slashed its rating to 'underweight' from 'equal-weight' and slapped a downside price target of 710p on the shares. And Anglo American dropped 86p to 3320p as the bank reduced its rating to 'equal-weight' from 'overweight'. HSBC also weighed in with a downgrade to 'neutral'.

Corporate China's burgeoning coffers underpinned another dazzling run from natural gas giant BG Group. Shares steamed ahead to another year's high of 928p, before settling 19p higher at 914p, on talk that a US investment bank has gobbled up another slug of stock on behalf of a client.

Many believe the mystery buyer is the People's Bank of China, which took a 0.46% stake in August. The perennial rumour - that Royal Dutch Shell is working on a joint bid with state-owned Petrobras of Brazil - also resurfaced, with a 1050p bid mentioned.

As oil industry cartel OPEC knocked back calls for it to turn on the production taps to slake the world's raging thirst for crude, the price of the black stuff surged to another alltime high of over $88 a barrel. That helped RDS shares spurt 25p higher to 2081p, while BP gushed up 4½p to 627 on further buying in the wake of chief executive Tony Hayward's well-received restructuring plan last week.

A sky-high oil price, however, proved a very ill wind for the rest of the market. Investors reasoned that, with energy prices pushing up household bills to intolerable levels for many, quoted companies can expect to take a hit on the bottom line.

Those fears pushed the FTSE100 30.2 points lower to close at 6,614.3, mirroring a 83.6 point slide to 13,901.2 on the Dow Jones Industrial Average. The US market was spooked by comments from Fed chief Ben Bernanke, who warned tumbling house prices would remain a 'significant drag' on the world's biggest economy into next year.

The UK banking sector, as ever, hogged much of the limelight, with Monday's worsethanexpected results from Citigroup still souring investor sentiment.

Lloyds TSB underperformed its peers with an 11p tumble to 536½p after it emerged US prosecutors will file money laundering charges against the bank. New York prosecutors have alleged that Lloyds TSB, along with the Bank of Cyprus, allowed for the cleaning up of hundreds of millions of dollars generated by a securities fraud.

The stand-out loser in financials, though, was credit checking firm Experian. Shares tumbled 12½p to 476½p after Morgan Stanley cut its rating to 'equal-weight' from ' overweight' and slashed its price target to 560p following dire news from its US operation last week.

The Wall Street bank said there is 'insufficient information' to assess the longterm prospects of Experian's US website LowerMyBills, which has been hit by the collapse in the sub-prime mortgage market.

Also weighing on the Footsie was a 2.7p slide in index heavyweight Vodafone to 173.6p. The mobile giant was swept up in panic selling in the European technology and telecoms markets following a particularly nasty profits warning from Ericsson, which wiped off a quarter of the Swedish handset maker's market value.

And precious metals specialist Johnson Matthey also lost its sheen, falling 87p to 1,753p as the bid hopes that sparked a 10% rally in the shares on Monday melted away. Stockbroker Evolution, which downgraded the shares to 'add' from 'buy', believes JM will remain a 'bid candidate'. This is because of its strong position in catalytic converters - a voguish niche given that vehicle emissions levels are becoming ever tighter.

Elswhere, internet auction house QXL Ricardo was up 35p to 1,290p after some upbeat comments from Citigroup. The bank said the dotcom survivor's profits are set to soar thanks to runaway broadband take-up in eastern Europe. Citigroup also started coverage of property website Rightmove (up 9p to 568½p) with a 'buy' rating.

• Something is stirring at Bodycote International, the engineering group that rejected a £1.1bn takeover bid from Swiss conglomerate Sulzer in April. A 7.3m block of shares changed hands at 290p. The buyer is unkown, but traders have not discounted some secret stake building by Sulzer, which could revive its original 344½p bid when the Takeover Panel's 'hands off' restrictions elapse. Bodycote ended down 2¼p to 288¾p.