LONDON: Britain’s top share index slipped to its lowest level in more than three weeks on Tuesday, with commodities-related stocks coming under pressure following a decline in crude oil and the prices of industrial metals.
The blue-chip FTSE 100 index was down 1.3 percent at 6,082.02 points by 1322 GMT, dragged down by a 4.5-percent fall in the UK mining index and a 2.1-percent weaker oil and gas sector following weaker commodities prices.
“A three-week low in the price of oil goes some way to explaining deteriorating market sentiment,” Jasper Lawler, analyst at CMC Markets, said. “Some heavy declines in industrial metal prices over the past three days is taking its toll on the UK-listed mining companies.”
Oil prices fell after a surprise drop in U.S. gasoline demand and on doubts whether oil producers can agree an output freeze to dampen a global supply glut, while copper hit a one-month low on uncertainty over the economic recovery in China, the world’s top raw materials consumer.
Shares in Glencore, BHP Billiton, Anglo American and Rio Tinto all fell between 4.0 and 6.7 percent. Among oil majors, Royal Dutch Shell and BP fell 2.7 percent and 2.2 percent respectively.
“We’re now currently within the third week of downside for oil prices and that follows on from five consecutive weeks of gains in U.S. crude oil, so I feel like we’ve seen quite a substantial rally – we’re taking back some of that. We’re also seeing people positioning as precursor to the OPEC meeting,” Joshua Mahony, market analyst at IG, said.
The world’s largest oil producers are due to meet in Doha on April 17 to negotiate an output freeze.
In other sectors, shares in grocer Tesco were hit by a downgrade from investment bank Deutsche Bank, which cut its rating on the stock to “hold” from “buy”, sending its shares 1.5 percent lower.
The investment bank cited the supermarket’s share price strength in recent months.
Marcoeconomic data also did not help the market. A closely watched survey showed Britain’s economy appears to have slowed since the start of this year as worries about the global economy, government spending cuts and a vote on staying in the European Union take their toll.
Copyright Reuters, 2016
Courtesy : BRecorder