FTSE 100 close: Oil falls take shares lower
The Footsie fell on the open as miners resumed last week's weakness and oil prices below $65 a barrel hit oil stocks.
Slow day: Trading is expected to be slow.
Declines for the resources heavyweights saw the FTSE 100 index close just under 1% lower, down 41.4 points at 4,194.9.
'This is a trend we're likely to see throughout July,' said Howard Wheeldon, strategist at BGC Partners. 'There is no new news out there on which anybody can set up a new stall to believe that recovery is very firmly the order of the day.'
Lonmin was one the worst affected among miners - down 99p at 1060p - as fears over the economic recovery continued to dog commodities following last week's poor jobs figures in the US and Europe. Xstrata and Kazakhmys were not far behind with falls of 48.8p to 606p and 38.5p to 591.5p respectively.
Rio Tinto agreed on Monday to sell its Americas food-packaging assets for $1.2bn to packaging group Bemis, raising yet more much-needed cash for the indebted miner. Shares were 141p down at 1,885p.
Shell and BP were also off, down 35p to 1466p and 12.55p to 466.7p respectively. And Tullow took fall, 25.5p down at 887p.
Onlt defensive stocks like telecoms, tobacco and pharmaceuticals benefited from investors' flight from risk. Vodafone rose 1.95p to 115.65p and Cable & Wireless lifted 0.5 to 133.2p. BT, which has offered employees the chance of long-term holidays in return for pay cuts, added 1.3p to 103.4p.
Other climbers in a difficult session for blue chips included drugs firms AstraZeneca and GlaxoSmithKline, which added 26.5p to 2676p and 12p to 1075p respectively. Shire advanced 7.5p to 837.5p. Benson & Hedges maker Imperial Tobacco meanwhile was 23p better off at 1603p. Rival British American Tobacco - which makes Lucky Strikes - was up 30p to 1740p.
Housebuilders welcomed a second upgrade in a few days. Shares in Bellway and Bovis Homes pushed higher after RBS upgraded both stocks to 'buy' in a sector review that follows hot on the heels of Bank of America-Merrill Lynch's last week.
RBS said the two appear to offer the best value following recent underperformance. The broker raises its rating for Bellway – 16p up at 627p - to 'buy' from 'hold', and hikes Bovis - up 13.25p to 389.75 - to 'buy' from 'sell'.
RBS also raises its rating for Persimmon - up 4.75p to 363.25p - to 'hold' from 'sell', but cuts its stance on Redrow – down 1.75p to 204.25p - to 'sell' from 'hold' as it thinks its valuation looks stretched.
RBS says it still expects UK house prices to fall further, but the risk of significant overcorrection looks lower and it has cut its forecast peak-to-trough decline to 20% from 35%.
JJB Sports shares dropped 7.75p to 23p after the British sports retailer says it is looking at an equity fundraising. This follows a report in Saturday's Times newspaper that the firm is seeking to raise at least £50m by selling shares at 12p each.
'12p appears an excessively dilutive placing price,' says Altium analyst David Stoddart, who has a 'sell' rating on the shares. 'While such a move would provide JJB with needed expansion capital, there is no evidence yet -- nor will there be for some time -- on what sort of returns those funds would generate,' he adds.
KBC Peel Hunt analyst John Stevenson says the discount on any share sale would have to be 'fairly significant in order to compensate for the size of the task ahead'.
Shares in Oxford Biomedica soared 13% to 0.25p at one point after the gene therapy specialist said findings by the US Food and Drug Ad
Broker Panmure is keeping a 'hold' recommendation but upgrades its target price to 12p from 7p. Shares closed 0.25p up at 12p.
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