Britain's top share index fell on Tuesday, as a drop in major mining and housebuilding stocks weighed on the market. The bluechip FTSE 100 index closed down 0.3 percent at 6,820.79 points, underperforming rival continental European stock markets which all rose. Mining stocks dominated the loserboard of the FTSE's worst performers, hit by lower copper and gold prices.
Gold and silver miner Fresnillo, which has surged around 140 percent so far in 2016 on the back of rising gold prices, tracked a pullback in those precious metals on Tuesday to finish 5.6 percent lower. Gold fell on Tuesday after US Federal Reserve officials sounded a hawkish note on interest rates, boosting the US dollar on currency markets. Gold is a non-interest bearing asset, so its relative appeal versus other asset classes is reduced when investors start to factor in rising interest rates.
Housebuilders such as Berkeley Group and Persimmon also fell after data showed that UK mortgage approvals for house purchases fell to 60,912 last month from 64,152 in June, the lowest since January 2015 and continuing a slowdown since the start of the year. The data also highlighted the impact on the housebuilding sector from June's shock Brexit vote which saw Britain vote to quit the European Union, with Berkeley shares down some 30 percent in 2016 and in danger of dropping out of the FTSE 100.
"The data paint a worrying picture of the housing market. It's not seized up by any means - more than 60,000 new mortgages were approved in July - but there are signs the Brexit vote has exerted a severe shock," said ETX Capital analyst Neil Wilson. The top riser on the FTSE 100 was Associated British Foods, which gained 3.4 percent after RBC analysts upgraded ABF to "outperform" from "sector perform". The FTSE 100 is up around 9 percent so far in 2016, although the US dollar value of UK shares has been hit by a fall in sterling following the Brexit vote.
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