Weakness in heavyweight miners pulled Britain's leading shares lower on Friday, with trading choppy and volumes light, as investors awaited news from a Group of 20 nations meeting in South Korea. At the close, the FTSE 100 was 16.49 points, or 0.3 percent, lower at 5,741.37, retreating after hitting a six-month closing high in the previous session.
Miners were among the worst blue chip performers on worries over whether financial leaders at the G20 meeting will agree on countering currency imbalances, which have been lifting the dollar and depressing metal prices. "The market has really been held back by uncertainty ahead of the G20 meeting with the whole business of QE2 (quantitative easing) in the background," said David Morrison, market strategist at GFT Global.
"Ultimately we have to worry about currency movements, with the stock market inversely correlated to the dollar, being hostage to the miners and metal prices." BHP Billiton shed 0.5 percent. The Canadian province of Saskatchewan, home to Potash Corp, said it opposed BHP's $39 billion bid to buy the fertiliser supplier, setting the stage for a politically charged final decision by the country's federal government.
Vedanta was a top faller among the blue chip miners, down 1.9 percent as Merrill Lynch downgraded its rating for the Indian-focused firm to "neutral" from, "buy". Oil services firm Petrofac lost 1 percent after BofA Merrill Lynch downgraded its recommendation to "neutral" from "buy" on valuation grounds. Reckitt Benckiser was the top FTSE 100 faller, down 4.6 percent after the consumer products group said its chief financial officer Colin Day would leave the company in March 2011.
US blue chips were 0.2 percent lower by London's close with investors skittish ahead of the G20 meeting outcome. Energy issues provided the main underlying strength for blue chips on Friday as crude prices bounced higher, with Royal Dutch Shell adding 0.3 percent.
BG Group gained 0.8 percent after Australia gave environmental approval to two coal-seam gas projects worth about $30 billion, led by BG and Santos. TUI Travel was the best FTSE 100 riser, rallying 3.2 percent after shedding more than 11 percent on Thursday when it revealed its finance chief would quit and restated its 2009 accounts as a result of what it said was a post-merger technical glitch.
BSkyB, Britain's dominant pay-TV firm, added 0.6 percent after posting strong first-quarter profits along with a better-than-expected rise in customers. On the second line, Micro Focus International was the top FTSE 250 riser, up 7.6 percent with traders citing talk that the business software group could be a target for US firm IBM. Technical factors pointed to positive trends for the FTSE 100 index. "The 20-day moving average currently around 5,661 acts as a trailing stop and still maintains a bullish bias," said Nicolas Suiffet, an analyst at Trading Central.