FTSE 100 Watch: Miners Drag Footsie Down

on May 20, 2013

The FTSE 100 was dragged down 0.15 percent to 6,712.99 as at 12.25 GMT on Monday, May 20, retracing its early morning gains. The blue-chip index climbed by 1.5 percent last week and has surged 14 percent so far this year boosted by central-bank stimulus.

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Miners’ shares took the Footsie lower on Monday with silver and gold prices coming under further pressure, partly due to investors becoming more confident and turning to riskier assets. **Fresnillo’s** shares fell by 4.49 percent to ₤10.21 on Monday’s morning, while **Randgold Resources** declined by two percent to ₤46.62.
**Eurasian Natural Resources Corporation** lost 2.80 percent of its market capitalisation after the board rejected a tentative offer from its founding oligarchs. Alexander Mashkevich, Alijan Ibragimov and Pathokh Chodiev offered to take ENRC private for ₤1.75 in cash and 0.231 of an existing Kazakhmys share for each ENRC share, valuing the group at just under $5 billion. ENRC’s board said the bid plan undervalued the business (ENRC Rejects Founders’ Bid Plan to Take It Private).

**easyJet** was one of the winners in the Footsie on Monday with the budget airline’s stock up 4.44 percent at ₤12.4078 as at 10.40 GMT. The advance was underpinned by a price target upgrade by Deutsche Bank analysts from ₤10.40 to ₤13.70. The bank currently has a “buy” rating on the stock. The airline’s stock was also buoyed by good results from rival Ryanair, which reported a 13 percent rise in full year profits to €569 million (₤482 million), on the back of growth in fares (Ryanair’s Share Price Takes Off on Better-Than-Expected Profit Growth).

The banking sector was mixed on May 20 in London trading with **Royal Bank of Scotland** and **HSBC** gaining 2.73 percent and 0.32 percent to ₤3.46 and ₤7.61, respectively. **Barclays** and **Lloyds** fell into negative territory in intraday trading despite early morning advances.
**Marks & Spencer** fell by 1.24 percent to ₤4.4541 after allegation surfaced that the company’s online sales were operated in a similar way to that of Amazon in order to minimise payments to the UK Treasury. The retailer is due to unveil its results for the 52 weeks ended March 31 on Tuesday.

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UK’s top grocer **Tesco** saw its shares rise by 0.59 percent to ₤3.83 after it unveiled plans to expand its China operations and contain its capital expenditures through a joint venture in the Asian country. The company also said that it intends to open 50 new franchise stores for its F&F clothing brand. Six stores are due to be launched this year with the first in the Kazakh capital Astana in June (Tesco Eyes Joint Venture in China).
Although the FTSE 100 declined on Monday, analysts remained bullish on the index. “What’s to stop it?” Michael Hewson, analyst at CMC Markets, said as quoted by Reuters. “At the end of the day, if you’re looking for a return on your money, where do you put it?”


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