Britain's blue-chip share index fell on Thursday, with basic resources and energy companies coming under fresh selling pressure due to lingering concerns about demand for metals and a poor outlook for commodity prices. Goldman Sachs cut its target prices for BHP Billiton and Glencore and reiterated its "sell" rating on Rio Tinto and Anglo American. The UK mining index and the oil and gas index slid 2.7 percent and 1.9 percent respectively, dragged down by a 2.0-to-7.6 percent drop in shares of Glencore, Anglo American and BHP Billiton.
Glencore traded just near this week's record lows. It has slumped nearly 65 percent in the past three months alone due to a sharp decline in commodity prices amid concerns for economic growth in China, the world's biggest metals consumer. The British blue-chip FTSE 100 index was down 1.2 percent at 5,962.26 points at 1357 GMT. The index has fallen more than 8 percent so far this year. "Markets continue to run hot and cold and any recent rallies have proved to be fairly unsustainable," Brenda Kelly, head analyst at London Capital Group, said.
"Today we witness a U-turn in FTSE movers, with the basic resource sector once again falling out of favour with market participants ... UK miners and energy companies are taking the brunt of the pain." British engineering conglomerate Smiths Group dropped 6 percent after several brokers cut its target price, citing lacklustre prospects for the company's John Crane energy services division due to recent market turmoil.
"The outlook for John Crane is weak, as oil & gas end markets take their toll," analysts at Nomura wrote in a note. On the positive side, Lloyds rose 1.2 percent after The Telegraph newspaper reported that Alex Wright, a fund manager at Fidelity, expected Lloyds to become a dividend giant within two years.
Retailer Next was up about 0.5 percent after a price upgrade from broker Nomura, which cited the company's multiple opportunities to grow both domestically and oversees online to attract new customers. In the mid-caps, travel company Thomas Cook rose 2 percent after maintaining its guidance for growth this year and saying that late summer trading had seen strong demand for holidays to Greece and Egypt.