Britain's top share index fell on Monday, breaking three days of gains as a fall in commodity prices prompted investors to shun mining and energy stocks, while conditions worsened in the credit markets. The FTSE 100 index of Britain's leading shares was down 45.9 points, or 0.7 percent at 6,386.6 points.
The index shed over 4 percent in November in its most volatile month of trading in four years. "What we're seeing is some money being taken off the table ahead of the run into Christmas, we've had such violent market swings in November," said Roger Cursley, UK strategist at Investec.
Mining stocks led by bid target Rio Tinto. Rio Tinto fell 3.7 percent, while Anglo American dropped 2.8 percent and BHP Billiton fell 2.1 percent. The fall in US crude oil to five-week lows below $88 a barrel ahead of an Opec meeting this week saw Royal Dutch Shell lose 0.8 percent and Tullow Oil drop 2.9 percent, while BP dipped 0.3 percent.
The FTSE has gained roughly 2.7 percent in 2007, compared with a 10.7 percent gain in 2006 as concern about the impact of the global liquidity squeeze hit investor confidence and cast doubt on the robustness of Britain's banks, particularly after Northern Rock fell prey to the credit crisis.
Banks were also among the largest negative weights on the FTSE on Monday as sterling interbank lending rates hit their highest level since late 1998 on Monday when hedge fund Long Term Capital Management collapsed.
Among financials HSBC, Standard Chartered, Barclays and Lloyds TSB were down between 0.4 and 2.6 percent, while Northern Rock fell nearly 8 percent, hit by speculation a proposed bid from Virgin Group could face complications.
Royal Bank of Scotland reversed earlier losses to rise 1 percent ahead of its much-anticipated pre-close final trading update on Thursday. "The FTSE had a phenomenal run (last week)," said Tom Hougaard, chief market strategist at City Index Markets. "We rallied 7 percent in a week - we're not going to start making a big fuss because we're down today."
"It's just so very, very normal when you've had such a huge run-up ... We were always going to fall back a little bit and it doesn't mean we're heading back down to new lows." The Bank of England's decision on interest rates is due on Thursday and is shaping up to be a close call as policymakers struggle to encourage economic growth, while price pressures mount.
A Reuters poll showed that most economists see at least one quarter-percentage point cut in rates by the end of the first quarter of 2008. Also keeping a dampener on trade this week could be caution ahead of Friday's monthly US employment report, which will highlight the economy's ability to generate jobs after interest rate cuts in September and October to mitigate the fallout from the credit crunch.
Pub and restaurant operator Mitchells & Butlers lost 5.3 percent after a price target cut, while rival Enterprise Inns fell 5 percent and Punch Taverns fell 0.7 percent. Among gainers, Tesco, the world's third-largest retailer, was the top positive influence on the broader UK market, rising 2 percent ahead of Tuesday's quarterly trading update, while Morrison Supermarkets also rose 2 percent.
Britain's biggest household goods retailer, Home Retail was among some of the largest percentage gainers, rising 3.5 percent as traders said the stock had been oversold in recent sessions. Among midcaps, shares in casino and Mecca bingo firm Rank jumped 8.7 percent after it said Malaysian gaming giant Genting has taken a near 10 percent stake in the firm.
Comments
Comments are closed.