FTSE 100 Watch: Footsie Down Despite Strong Economic Data

on Aug 14, 2013
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iNVEZZ.com Wednesday, August 14th: The Footsie today plunged in the morning but retraced losses later and at 12.23 BST was 3.19 points or just 0.05 percent lower at 6,608.75. The index was supported by strong economic data, which offset a decline in mining stocks sparked by worse-than-expected results from ENRC.

The UK Office of National Statistics today reported that the unemployment rate held steady at 7.8 percent in June, in line with expectations. Markets also received support from figures showing that stronger growth in France and Germany lifted the Eurozone out of its longest recession in the second quarter. “The
UK labour market remains resilient and recent signs that the past recession is over seem to support further job creation,” said Annalisa Piazza, analyst at Newedge Strategy, as quoted by Reuters.

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Investors also digested the latest minutes from the Bank of England, which showed that most members had voted in favour of leaving interest rates at 0.5 percent until the unemployment falls below seven percent. One of the nine policymakers, Martin Weale, was supportive of the proposition but voted against it “in order to register his preference for a time horizon for the first inflation knockout that was shorter than proposed.”

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**Eurasian Natural Resources** Corporation plunged by 2.71 percent to 230.10p after it reported underlying first-half profits down by 17 percent to $944 million (₤610 million). The Kazakh miner is in the final stages of a $4.6 billion (₤2.97 billion) buyout by its founders and the Kazakh government, a move that will take the company private and end six turbulent years in London, marred by corruption investigations and boardroom disputes.

Also in the mining sector, **Rio Tinto** and **Anglo American** went ex-dividend, with the shares shedding 1.98 percent and 1.69 percent to 3,198.28p and 1,546.00p, respectively. Other heavyweights that went ex-dividend include **AstraZeneca, Pearson** and **Diageo.**
**IAG** was one of the risers in the morning, gaining 1.8 percent on the back of Deutsche Bank’s reiteration of its “core buy” rating.

The Footsie has rallied by about 9.63 percent above its June low of 6,029.10 and is about 12.07 percent higher in the year-to-date. The index trades on a 12-month forward price/earnings ratio of 12 times, well above its five-year average of 10.4 times. “It’s not easy to see what’s going to push the FTSE-100 out of its latest range… some upside looks possible in the near-term but it’s not easy to make a case for buying it up here,” Charles Stanley analyst Bill McNamara said, as quoted by Reuters.
**The FTSE 100 was 6.95 points or 0.11 percent lower at 6,605.99 as of 14.08.2013, 13.05 BST.**

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