Commodity stocks pulled Britain's top shares lower on Wednesday as US data showed a sharp slowdown in industrial output, and after investors switched into the dollar after BoJ's yen intervention and recent sharp gains. The FTSE 100 index closed down 11.85 points, or 0.2 percent at 5,555.56, snapping a five session winning streak, having inched higher late on Tuesday to extend Monday's four-month closing peak.
Heavyweight mining and energy stocks fell in tandem with crude and base metal prices as worries persisted over the choppy economic recovery in the US Industrial output data from the world's biggest economy showed a rise of 0.2 percent in August, matching expectations for a sharp slowdown from the prior month when auto production was unusually strong.
Investors also saw better value in switching funds into the US dollar after the Bank of Japan intervention to curb yen strength, and following the recent strength in commodities. Despite continuing concerns over the recovery in the United States, Jimmy Yates, head of equities at CMC markets, said a double-dip recession is unlikely and sees the FTSE consolidating into 2011.
"At current levels, the FTSE has already troughed. While the picture going forward is still very unclear, I do not think any downside will push us below 4,800 seen in July," he said, forecasting the FTSE to be around the 5,675 level by mid-2011. BP Plc fell 2.7 percent. The oil major lacked a clear chain of command for dealing with a loss of well control on a North Sea oil rig, safety regulators found three months before a blow-out in the Gulf of Mexico caused America's worst ever oil spill.
Declines were curbed as US indexes showing some resilience following the industrial output figures provided encouragement to the bulls. As the UK market closed the Dow Jones and S&P 500 were firmer. Both US indexes have lagged the FTSE's rally over the last three weeks. London's blue chips have broken out of their two-month trading range, touching four month highs and rising almost 9 percent.
The UK blue chip index carried a 12-month forward price-to-earnings of 9.84 times, versus a 10-year average of 14.86, Thomson Reuters Datastream showed. Fashion retailer Next led blue chip gainers, up 6.7 percent after meeting forecasts with a 13 percent gain in first-half operating profit and keeping its full-year outlook unchanged.
Other retailers also benefited from Next's success, with Marks & Spencer and Kingfisher each up 3.4 percent, while supermarket groups Tesco and WM Morrison added 1.7 percent and 0.6 percent respectively. Elsewhere on the downside, AstraZeneca shed 1.9 percent after saying US regulators had extended their review of the drugmaker's potential new blockbuster heart drug Brilinta by three months. Banks were easier. The session marked the two-year anniversary of the collapse of Lehman Brothers, which sparked turmoil in global financial markets.
Comments
Comments are closed.