Mining Stocks Weigh FTSE Down

Britain’s top share index, the FTSE 100 fell at the start of the week, as dull European and Asian data renewed global growth fears and kept the focus on a gloomy economic outlook, tempering the boost given to markets by recent central bank stimulus moves in Europe and the United States, Reuters reported on 24 September 2012.

The FTSE 100 Index closed 13.8 points, or 0.2 per cent lower at 5,838.8, having notched up a loss of 1.1 per cent last week after two consecutive weeks of gains. Listed miners were the biggest casualties of the weak sentiment. The biggest FTSE fallers were Eurasian Natural Resources (LON:ENRC) which slipped 5.3 per cent to 330.6 pence, Evraz (LON:EVR) dipping 3.9 per cent to 261.5 pence, Vedanta Resources (LON:VED) and Anglo American (LON:AAL) which were both down 3.5 per cent to 1,056 pence and 1,870 pence, respectively. Overall the mining sector has fallen around 5 per cent, or around 8 points, which is about a half of the index’s decline.

!m[](/uploads/story/461/thumbs/pic1_inline.png)Banking shares also contributed to the FTSE’s fall. Royal Bank of Scotland (LON:RBS) fell 0.35 per cent to 275.35 pence and Barclays (LON:BARC) declined 0.34 per cent to 223.05 pence, while HSBC (LON:HSBA) was down by the more modest 0.07 per cent. The banking stocks’ negative trading reversed the summer rally as investors’ appetite for risk shrank and the focus returned to lenders’ exposure to Eurozone debt. Fears around the block’s debt crisis have been revived this week with Spain, under pressure to submit to a rescue programme, due to present its 2013 budget on Thursday (September 20) and with talks due to restart between Greece and the so-called troika – the European Commission, the European Central Bank and the International Monetary Fund — on the progress of austerity measures linked to a rescue package.

Traders’ confidence has also been knocked by recent disappointing trade figures in Japan and poor manufacturing data from the world’s top consumer of metals China. The downbeat mood from Asia was also partly caused by a comment over the weekend from the People’s Bank of China that the mighty Chinese economy was not rebounding in the third quarter. A weaker-than-expected Ifo business climate survey for September in Germany also contributed to the negative trading. Germany’s Ifo business sentiment indicator fell to 101.4 from 102.3 with the data hurting near term sentiment in trading across Europe. Yet, according to analysts Britain’s top share index has reached a secure level with major losses not expected.
However, on that point Lex van Dam, hedge fund manager at Hampstead Capital warned: “Quite a big day for the FTSE today with the 5,800 level technically a very important support level. If we can’t hold that then chances are that the rally from the start of June has now finished and that further downside will be most likely.”