Britain's top share index closed lower on Friday after a slight recovery in battered metal prices failed to restore confidence in the sustainability of the global economic recovery. Commodity stocks were the biggest drag on the FTSE 100 and the mining index lost 0.7 percent bringing the month's losses to 7.8 percent, set for its worst month since last July.
Energy firms fell as crude retreated by around 1 percent hurt by a stronger dollar. Royal Dutch Shell fell 1 percent. Silver climbed as much as 5 percent on Friday as investors bought back in on the dips. It had fallen by nearly a third after it hit record highs in late April as concerns over global growth and gains in the dollar hurt commodities, This helped precious metal miner Fresnillo add 1.5 percent after it fell more than 7.5 percent on Thursday. But base metal miner Rio Tinto fell 0.5 percent.
The FTSE 100 fell 0.3 percent to close at 5,925.87, down for six of the last eight sessions. It is down 2.4 percent in May. "It's partly seasonal, investors are reluctant to put money on the table at this time of year," Hugh Harvey-Kelly director, European equities trading at HSBC. "US quantitative easing is coming off and some people are talking about UK rates going up as soon as August so there are a few clouds on the horizon."
Technical indicators hinted at further losses. Nicolas Suiffet, analyst at Trading Central said the next targets were 5817 and then 5600 after the index closed beneath a 50 day moving average at 5,930. Sentiment was helped earlier in the session as Germany reported soaring first-quarter GDP figures. But bears came back to the fore as US inflation hit the highest level in 2-1/2 years last month.
Jitters about the debt situation in peripheral European economies also encouraged investors to take money off the table ahead of the weekend. Risk-sensitive banks also retreated into negative territory. Bucking a weaker trend for energy related stocks, oil services firm Petrofac rose 2.1 percent, after is said it was confident of hitting its target for profit growth in 2011.
Whitbread rose 2.1 percent after Britain's biggest hotel operator's shares were boosted by director share buying, and talk of the potential for the company to spin-off of its Costa Coffee chain. Retailers Next and Marks and Spencer fell 1.8 and 0.9 percent, respectively, with traders saying that weak figures from department store chain John Lewis encouraged investors to book profits following the retailers' strong showing. Scottish & Southern Energy fell 2.4 percent as both Citigroup and Matrix downgraded their rating for the utility firm on valuation grounds, after recent strong gains, helped by commodity stock weakness.
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