Britain's top share index ended in negative territory for a fourth consecutive session on Friday as weakness in commodity stocks and banks outweighed gains from defensive pharmaceuticals. The FTSE 100 ended down 16.29 points, or 0.3 percent, at 5,251.41 points, the lowest close since November 10.
It ended down 1.4 percent on Thursday, its biggest one-day fall for three weeks. The index is still up 52 percent from a March low. "Sentiment appears to have started to shift slightly away from further gains, and towards a possible rebound in the US dollar, as investors start to take money off the table and become slightly more risk averse," Michael Hewson, analyst at CMC Markets.
Energy stocks took the most points off the index as crude fell 1.1 percent, pressured by a stronger US dollar. BG Group, Royal Dutch Shell and BP shed 0.4 to 1 percent. The mining sector was also on the back foot, against a backdrop of mixed metals prices, with Kazakhmys, Eurasian Natural Resources and Vedanta Resources down 0.6 to 1.3 percent.
BHP Billiton fell 1 percent. A leading Chilean mine union threatened to halt output at mines owned by BHP in solidarity with strikers at its Spence deposit, fanning supply disruption fears in the top copper producer. A broker downgrade weighed on Rio Tinto, off 1.1 percent, with Credit Suisse cutting its rating on the stock to "underperform".
Banks were lower as investors' risk appetite remained fragile. HSBC, Barclays, Standard Chartered and Lloyds Banking Group fell 0.1 to 2 percent. Thomas Cook and TUI Travel were the two biggest blue chip fallers, shedding 4.3 percent and 4 percent, respectively, after Morgan Stanley downgraded its ratings for the travel companies, citing a weaker operating environment and more expensive debt refinancing.
Defensive stocks were in demand as investors turned to assets perceived as safe bets. GlaxoSmithKline rose 1.1 percent, Shire added 1.4 percent while Vodafone put on 0.5 percent. SABMiller extended gains made on Thursday in the wake of its first-half results, rising 0.9 percent as a raft of brokers upgraded their target prices for the world's No 2 brewer. Diageo, the world's biggest spirits group, added 0.4 percent.
Telecoms firm Cable & Wireless rose 1.8 percent, bolstered by an upgrade to "overweight" by J.P. Morgan, and with news of a deal with Tesco to supply it with wholesale broadband services also lending support. Analysts said the market might witness profit-taking in the short term.
"The path of least resistance on a very short-term basis is to try and take it back a little bit," said Stephen Pope, chief global market strategist at Cantor Fitzgerald. "But if you start looking at some of the forward earnings projections into 2010, it does indicate that we should actually trade these markets to better levels," he said.