Britain's top share index fell on Tuesday, underperforming other European markets as energy and mining stocks were hit by weaker oil and metals prices. The blue-chip FTSE 100 index, which is more heavily weighted towards commodity-related stocks than continental European indexes, fell 0.4 percent. Signs that leading oil exporters were struggling to agree a deal to cut production to reduce global oversupply ahead of a meeting on Wednesday pushed Brent crude down more than 3 percent.
Gold fell and metals including copper, lead and steel slipped on perceptions that a post-US election rally in industrial metals prices had overreached. That pushed the FTSE mining stocks index and the oil and gas index down 2.2 percent and 2.1 percent respectively.
"(With) continued production cut brinkmanship from both Opec and Russia, scepticism is still rife about whether tomorrow's official Opec meeting in Vienna will be a success," said Mike van Dulken, head of research at Accendo Markets. Mining companies Antofagasta, BHP Billiton, and Fresnillo were the biggest fallers, down by between 3 and 3.9 percent. Shares in BP dropped 2.1 percent while Royal Dutch Shell slipped 2 percent.
But banks stabilised after Monday's fall, with Barclays rising 1.1 percent, even though Asia-exposed HSBC and Standard Chartered were little changed. Homebuilders Barratt Development, Persimmon and Taylor Wimpey gained between 1.9 percent and 2.3 percent after Bank of England data showed mortgage approvals were stronger than expected in October.
The data also showed lending to Britons expanded last month at the fastest annual pace in 11 years, helping boost consumer-facing stocks such as retailers Next and Dixons Carphone and broadcaster ITV by between 1.8 and 2.7 percent. Mid-cap stocks on the FTSE 250, which are less exposed to swings in commodity prices, edged up 0.1 percent. Shares in broadband company TalkTalk rebounded 3.1 percent after touching a four-year low on Monday, as Britain's telecoms regulator said it would try to force BT to legally separate its Openreach network infrastructure division into a legally separate entity.
This move would benefit smaller broadband firms such as TalkTalk as it would "allow them to see whether they have been paying over the odds for access to the UK's copper and fibre optic network," Accendo Markets' van Dulken said. TalkTalk shares had fallen by a quarter over eight sessions after results earlier in the month, but have been up for the last three days. BT fell in early deals, but ended up 1.2 percent.
Mid-cap food service company SSP Group jumped 8.5 percent after reporting stronger revenues and profits. But in the longer term, British mid-caps are in for a tough time as the index has yet to price in the effect of Britain's vote to leave the European Union, French investment bank Societe Generale said.
"We are cautious on the FTSE 250, more domestic than the FTSE 100, as it is trading above its pre-referendum level despite the outlook for much lower GDP growth and much higher inflation," the bank's strategists said in a note. By contrast, higher commodity prices and weaker sterling will help the FTSE 100 gain more than 10 percent by the end of 2017, they said.
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