FTSE tumbles 2 pct hit by commods sell-off

By Jon Hopkins

LONDON (BestGrowthStock) – Britain’s top share index ended sharply lower on Monday, seeing two months of gains wiped out, as heavyweight commodity issues dropped back with weaker metal prices and only two banks managed modest gains.

The FTSE 100 (.FTSE: ) index dropped 117.75 points, or 2.1 percent, to close at 5,550.95, the day’s low, having reversed from a session peak of 5,722.70.

The UK blue chip index ended below the 5,600 level for the first time since October 1, just holding above that month’s opening level of 5,548.62.

“A monthly closing price reversal top could be a bearish sign that this market is getting ready to roll-over to the downside, with 5,483 to 5,385 the next likely major downside target,” said James A. Hyerczyk, an analyst at Autochartist.

“A failure to hold the last swing bottom at 5,566 sets up this market for a further acceleration to the downside.”

Energy issues were the biggest blue-chip sector fallers, although the crude price held firm, with BG Group down 3.2 percent and Royal Dutch Shell (RDSa.L: ) off 2.2 percent.

BP (BP.L: ) fell 1.8 percent. The firm has agreed to sell its stake in Argentina-based oil and gas group Pan American Energy to Bridas Corp for $7 billion.

Oil services firm Petrofac (PFC.L: ) was the top blue-chip faller, down 5.8 percent, squeezed lower after a rally, with analysts raising strategic concerns over a deal in Nigeria.

Oil explorer Cairn Energy (CNE.L: ) shed 4.4 percent, while metals firm Vedanta Resources (VED.L: ) lost 3.1 percent.

India’s Oil Secretary S. Sundareshan said Monday a decision on Cairn’s application to transfer majority stakes in its Indian assets to Vedanta will be taken before end-February.

Other miners fell as metal prices reversed an earlier rally pressured by a stronger dollar, with Rio Tinto (RIO.L: ) shedding 3.3 percent and Antofagasta (ANTO.L: ) down 2 percent.

WALL STREET WEAK

U.S. blue chips were down 1.2 percent by London’s close, returning from Friday’s post-Thanksgiving half-day session cautiously as worries lingered about the European credit crisis in spite of a bail-out deal finally being agreed for Ireland.

EU finance ministers on Sunday endorsed an 85 billion euro ($115 billion) loan package to help Ireland cover the country’s bad bank debts and bridge its budget deficit, and approved the outlines of a permanent crisis-resolution system.

Just two banks made up the blue chip leader board on Monday, with the rest of the sector seeing a post-Ireland bail-out rally reversed, with Royal Bank of Scotland down 0.4 percent.

Barclays (BARC.L: ) was the top FTSE 100 gainer, up 1.2 percent. Bob Diamond, Barclays’s chief executive designate, is spearheading a strategic review of 50 to 60 of the bank’s key divisions to determine if underperforming units can demonstrate clear growth potential, The Sunday Times said.

And HSBC (HSBA.L: ) added 0.1 percent, helped by its inclusion as one of JP Morgan Cazenove’s stocks to watch for 2012.

On the data front, the Office for Budget Responsibility raised its 2010 growth forecast for Britain to 1.8 percent from its 1.2 percent June forecast.

But it cut its 2011 and 2012 estimates to 2.1 percent from 2.3 percent and to 2.6 percent from 2.8 percent.

FTSE tumbles 2 pct hit by commods sell-off