FTSE down as commods retreat, UK outlook uncertain

By David Brett and Nia Williams

LONDON (BestGrowthStock) – Weak commodity stocks pushed Britain’s top shares lower on Wednesday, following falls overnight on Wall Street and in Asia as downbeat import data from China dampened sentiment.

By 1213 GMT the FTSE 100 (.FTSE: ) was down 29.05 points, or 0.5 percent, at 5,846.14. It closed up 0.4 percent at 5,875.19 on Tuesday, having briefly broken through the 5,900 level for the first time since June 6, 2008, earlier in the session.

“There was a bit of dollar strength overnight and in the Asian market which put gold off its highs and copper as well. Mining stocks are moving down in line with metals,” Will Hedden, sales trader at IG Index, said.

Commodity-linked assets (.FTNMX1770: ) (.FTNMX0530: ) paused following recent strong gains, which have been spurred by soaring metal and crude prices, with weak Chinese import data also weighing on the sectors.

Miners alone put on nearly 8 percent in the last week following the U.S. Federal Reserve’s announcement of further quantitative easing.

Platinum miner Lonmin (LMI.L: ) was the biggest FTSE faller, down 2.9 percent while gold miner Randgold Resources (RRS.L: ), which climbed sharply on Tuesday after third-quarter results, fell 2.7 percent.

Energy firms also fell following recent gains, with crude down 0.3 percent. Oil majors BP (BP.L: ) and Royal Dutch Shell (RDSa.L: ) fell 1.4 and 1.3 percent respectively.

UK OUTLOOK UNCERTAIN

The Bank of England said there was uncertainty among its Monetary Policy Committee on the economic outlook for the UK.

British inflation will fall below target in two years’ time, the BoE forecast on Wednesday, but stressed the outlook was highly uncertain and it stood ready to change policy in either direction.

“Inflation will be more of an issue next year but if you see more wavering among MPC committee members and other people starting to vote for interest rate rises or more QE you might expect a bit more volatility in the market,” IG’s Hedden said.

Aero-engine maker Rolls-Royce (RR.L: ) fell 0.9 percent after Singapore Airlines (SIAL.SI: ) said it will replace engines on three of its Airbus A380 planes after finding oil stains on them, almost a week after Australian rival Qantas (QAN.AX: ) grounded its A380 fleet due to an engine failure.

And a Boeing (BA.N: ) 787 test flight made an emergency landing on Tuesday in Texas with smoke in the cabin, the first incident of its kind, putting additional scrutiny on the already delayed program.

“Boeing says it is not engine problems but it isn’t good for (Rolls Royce’s) reputation,” a London-based trader said.

Supermarket group J Sainsbury (SBRY.L: ) shed 1 percent, handing back some of its recent gains, after meeting first-half profit forecasts.

On the upside, Britain’s second-largest electricity generator Scottish and Southern (SSE.L: ) climbed 4.7 percent after reporting half-year results and raising its dividend. BofA Merrill Lynch upgraded its stock to a “buy” rating.

Essar Energy (ESSR.L: ) rose 0.7 percent after announcing it was enhancing capacity by 2 million tons at its Vadinar refinery in India, in addition to the 18 million tons that will be achieved post Phase I expansion.

BAE Systems (BAES.L: ) gained 4.3 percent after Investec reiterated their “buy” recommendation following a bullish investor day.

(Additional reporting by Nia Williams; Editing by Erica Billingham)

FTSE down as commods retreat, UK outlook uncertain