Britain's blue chip index ended down 0.6 percent on Monday, with weaker raw material prices hurting oil producers and miners, but drugmaker AstraZeneca and utility Centrica offered support. The FTSE 100 closed 26.59 points lower at 4,435.5, after rising more than 5 percent last week. The British benchmark is flat for the year, but has rallied more than 28 percent since hitting a six-year low on March 9.
"We have a little bit of correction today after the rally we had in the last couple of weeks. I thought the correction would be a bit more severe," said Philip Gillett, sales trader at IG Markets. "There seems to be resistance at around 4,400 level and there is perhaps scope to continue going for another week," he said, adding he was bearish towards the market as economic fundamentals, albeit improving, remained weak.
Volumes on the FTSE 100 were at 90 percent of the index's 90-day average daily volume. Index heavyweight oil producers took most points off the index as crude prices fell below $58 a barrel. BP, Royal Dutch Shell, BG Group, Tullow Oil and Cairn Energy lost 0.7-3.3 percent. Miners were other standout losers, driven by softer metal prices and after Lonmin launched a $457 million rights issue and swung to a first-half loss. Lonmin sank 10 percent.
Within the mining sector, BHP Billiton, Kazakhmys, Anglo American, Antofagasta and Xstrata were off 1.3-13.6 percent. However, gold miner Randgold Resources advanced 3.4 percent, while silver miner Fresnillo put on 1.9 percent. Banks, which have rallied 125 percent since hitting lows on March 9, were mixed.
Standard Chartered and Royal Bank of Scotland fell 6.8 percent and 2.7 percent, respectively. Barclays added 2.1 percent after it reported receiving additional offers for its iShares business that might trump last month's agreed bid from CVC Capital Partners. Lloyds Banking Group put on 1.1 percent.
HSBC ticked up 0.1 percent after falling as much as 4.5 percent earlier. The bank said first-quarter profit was "well ahead" of last year but would have been down without accounting gains on its debt. AstraZeneca offered support, with the drugmaker up 5.5 percent after its experimental heart drug Brilinta proved superior to Sanofi-Aventis SA and Bristol-Myers Squibb's blockbuster Plavix in a pivotal clincial trial.
Also on the upside, Centrica surged 6 percent after saying it would pay 2.3 billion pounds ($3.4 billion) for a 20 percent stake in British Energy - the nuclear operator bought by France's EDF earlier this year. The deal saw Centrica pay out less cash than had originally been anticipated.
G4S soared 6.3 percent after the security services group said it was confident of a strong performance in 2009 after improving margins slightly in the first-quarter. BAE Systems rose 3.7 percent. Credit Suisse raised its 2010 earning per share forecast by 0.9 percent and 2011 by 4.7 percent, and kept its "outperform" rating onthe defence contractor.