FTSE 100 close: Miners and banks fall flat
Investors cautious ahead of key G20 and Federal Reserve meetings in the US this week had the FTSE 100 beating a retreat today.
Falling commodity prices also contributed to the downward pressure on the markets, and by the close the FTSE 100 had lost 38.5 points to finish at 5,134.36.
US stocks also under pressure this afternoon after strong recent gains and the Dow Jones was down 26.4 points at 9,793.8.
Leaders of the G20 meet on Thursday and Friday in Pittsburgh, and US President Barack Obama said he would push world leaders for a reshaping of the global economy in response to the crisis.
And on Wednesday the Federal Reserve is expected to keep its benchmark Fed Funds rate unchanged at 0.25%, with investors looking for signs of how quickly it might remove its programmes to revive credit markets in the stricken economy.
The current market rally saw the FTSE 100 push towards a 12-month high last week, having comprehensively broken through the 5000 barrier, and despite the early problems this week, analysts predict further gains.
David Buik, a partner at broker BGC, says: 'Equities may well remain on good terms with themselves until Christmas, barring some unforeseen drama.'
In a quiet day for corporate news, broker comments determined the major moves in the top flight.
Mining stocks Kazakhmys and Vedanta Resources fell 37p to 1,087p and 70p to 1,940p after being downgraded, while Antofagasta moved ahead 0.5p to 765p following a buy rating from Goldman Sachs.
Cable & Wireless dipped 2.2p to 148.1p after broker ING downgraded the telecoms group from buy to hold due to continued pressure in the Caribbean and Panama.
Markets in the UK have also been hampered by the falling value of sterling. Having staged a small recovery this year, the pound lost 1% on Friday, at $1.62 against the dollar - well below levels before the crisis broke.
Commodity prices in the US saw crude lose more than 1% to $71.25 a barrel after Asia's premier refiner Sinopec said that China's fuel sales continued to lag behind. The news had energy companies rattled, with Tullow Oil sinking 21p to 1,158p and BG Group losing 28p to 1,111p.
Brent crude today stood at 68.6p and gold was at $$1,012 an ounce.
Banks were among the FTSE 100's worst performers, too, led lower by Royal Bank of Scotland - the blue-chip index's biggest loser - which fell 2.9p, or 5%, at 53.4p.
RBS is talking to investors to gauge support for a 'modest' equity placement of £3bn to £4bn($4.91bn to $6.54bn), according to reports this Sunday. The money raised from the share issuing is expected to be used to offset a small proportion of the government's financial interest in RBS.
Richard Hunter, head of UK equities at Hargreaves Lansdown was sceptical of the move, saying: 'I'm not totally convinced the RBS speculation at the moment is necessarily positive news.' Lloyds Banking Group, down 3.07p at 107.6p, and Barclays, down 3.65p at 370p also lost out.
Meanwhile, investors were more positive on retailers, helping Marks & Spencer to rise 5.9p to 374.4p, and boosting supermarket chain Morrison up 1.8p to 2852p.
Drugmakers also found favour as investors sought safety in the defensive sector. GlaxoSmithKline added to 9p at 1,209.5p and AstraZeneca climbed 19p to 2,799p.
Tomorrow's agenda sees reports are expected from Imperial Tobacco down 18p at 1,752p, cruise operator Carnival, down 10p at 2,060p, and sports fashion retailer, JD Sports up 21p at 600p.
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