Britain's leading share index ended 0.6 percent lower on Monday, lacking any lead from Wall Street which is closed for the Labour Day holiday, with energy stocks tracking weaker crude after Hurricane Gustav was downgraded. The FTSE 100 closed down 33.8 points at 5,602.8, starting the new month poorly after its relatively good showing in August, which was up 4.2 percent.
"Overall the FTSE is struggling to hold onto the 5,600 level but look for renewed direction tomorrow once the impact of Gustav - both physically and on the US futures markets - is better understood," said David Fineberg, dealer at CMC Markets. Energy stocks fell after crude prices retreated as Hurricane Gustav weakened to a category 2 storm as it crossed the US Gulf before making landfall in Louisana, with US oil futures down over $4 per barrel.
Cairn Energy, Tullow Oil, BG Group, and Royal Dutch Shell all shed between 2.0 and 5.6 percent. Miners lost ground as well tracking weaker metal prices as the US dollar rose again. Kazakhmys, Anglo American, BHP Billiton, Xstrata, and Antofagasta shed between 4.0 and 5.8 percent. Rio Tinto eased 4.2 percent.
The president of Chinese aluminium maker Chinalco said the group may increase its minority stake in the miner if market conditions are right, but has no timetable for such a move. Away from commodities, Enterprise Inns lost 2.5 percent after recent negative broker comment and ahead of earnings news in the UK pubs sector this week. The firm's blue chip status is also in doubt ahead of next week's FTSE indexes reshuffle, traders said.
London Stock Exchange shed 2.6 percent. The Financial Times said the bourse will introduce on Monday deep fee cuts and incentives for traders in the latest sign Europe's exchanges are ratcheting up efforts to defend themselves against a wave of new entrants in equities trading. RSA Insurance rose 4.3 percent as traders cited persistent market talk of bid interest from Zurich Financial Services.
Last Thursday, RSA shares surged 5.7 percent on speculation of possible Zurich Financial interest. Both RSA and Zurich had then declined to comment. British Airways jumped 4.3 percent higher as crude prices retreated easing the pressure on fuel costs, with tour operator TUI Travel, up 2.6 percent, and buses firm FirstGroup, up 2.6 percent, similarly benefiting.
US dollar earners also featured among the FTSE 100 gainers as the currency moved higher again after a recent lull. Wolseley put on 3.5 percent, British American Tobacco added 2.2 percent, Rolls-Royce gained 2.0 percent, and Unilever firmed 1.4 percent. Banks rallied from early falls to end higher with the impact of Chancellor Alastair Darling's downbeat comments at the weekend on the outlook for the UK economy countered by some bargain-hunting.
The Chartered Institute of Purchasing and Supply/Markit said its purchasing managers' index rose to 45.9 last month from a downwardly revised 44.1 in July. Analysts had expected a reading of 44.0 in August. The figures, although better than expected, still pointed to a marked economic slowdown which, together with Darling's comments will keep the pressure on the Bank of England ahead of this week's Monetary Policy Committee meeting, a trader said.
Comments
Comments are closed.