FTSE falls as economic woes hit banks, commodities

By David Brett

LONDON (BestGrowthStock) – Banks and commodity stocks pushed Britain’s top shares lower on Wednesday, with worries over the global economic recovery knocking sentiment and weak volumes exacerbating stock moves as the FTSE 100 remained range-bound.

The FTSE 100 (.FTSE: ) closed down 47.68 points, or 0.9 percent, at 5,302.87 after ending 1.4 percent higher on Tuesday at 5,350.55 for its highest close in a week.

“For the best part of a month or so now equities have been simply trading through the motions,” Joshua Raymond, market strategist at City Index, said.

“Until heavier trading volumes come back into the market, investors are happy to simply be range trading at this point.”

The index traded just 55 percent of its average 90-day volume and the market has held in a tight range over the last month, hugging the 5,300 level in holiday-thinned trade.

Economy-sensitive banks were hardest hit as investors withdrew from cyclical stocks. HSBC (HSBA.L: ) shed 2.3 percent.

Bank of England policymakers considered the case for both easing and tightening policy this month, before voting eight to one to keep interest rates at a record low of 0.5 percent, minutes showed.

U.S. home loan demand climbed last week but record low mortgage rates failed to light a fire in a market constrained by unemployment and tight lending practices.

“Under the surface lies a nagging concern that the Western economies are facing a Japan-style scenario where they lost two decades,” said Jeremy Batstone Carr, head of research at Charles Stanley.

COMMODITY SLIDE

Mining stocks fell after Tuesday’s advance as metal prices waned on doubts about the demand outlook.

BHP Billiton (BLT.L: ) slipped 3.4 percent after launching a hostile $39 billion bid for Canadian fertilizer group Potash Corp (PTO.TO: ).

Eurasian Natural Resources (ENRC.L: ) fell 4.3 percent after the Kazakh miner said it was wary about commodity prices in the second half. It posted a 63 percent rise in first-half earnings on higher output and prices.

Xstrata (XTA.L: ) bucked the trend, rising 1.1 percent. Traders cited market talk of bid interest from Swiss-based commodity trader Glencore (GLEN.UL: ).

Energy stocks retreated in tandem with crude prices, which fell after an industry report signaled petroleum inventories in top consumer the United States were headed for a record.

BP (BP.L: ), Royal Dutch Shell (RDSa.L: ) and Cairn Energy (CNE.L: ) shed 0.8 to 2.6 percent.

Anglo American (AAL.L: ), British American Tobacco (BATS.L: ), Carnival (CCL.L: ), Fresnillo (FRES.L: ), Hammerson (HMSO.L: ), HSBC (HSBA.L: ), Pearson (PSON.L: ), and Standard Life (SL.L: ) fell after going ex-dividend.

Diageo (DGE.L: ) fell 1.1 percent as HSBC cut its rating.

On the upside, British satellite firm Inmarsat (ISA.L: ) said U.S. firm LightSquared had activated a co-operation agreement which would deliver payments totaling $337.5 million, boosting Inmarsat’s shares 5.6 percent.

Intertek (ITRK.L: ) rose 4.2 percent as tracker funds bought into the stock following news that the testing equipment company was to be added to MSCI Inc’s (MSCI.N: ) World Stock Index.

Technical factors also kept index moves limited. Recent highs of around 5,410 and the 5,435 points marking the 61.8 percent retracement of this year’s down move from 5,833 to the lows at 4,790 are acting as resistance, said Michael Hewson, analyst at CMC Markets.

(Editing by Michael Shields)

FTSE falls as economic woes hit banks, commodities