LONDON MARKETS: FTSE 100 Ends Lower, Pulling Back Further From Record
January 16 2018 - 12:18PM
Dow Jones News
By Carla Mozee and Victor Reklaitis, MarketWatch
BP, mining stocks help lead the way down
British blue-chip stocks finished lower Tuesday, pulled down in
part by a fall in shares of BP PLC after the energy heavyweight
said it will take a $1.7 billion charge related to the Deepwater
Horizon disaster.
A selloff for miners also weighed on the main equity
benchmark.
How markets are moving: The FTSE 100 index fell 0.2% to close at
7,755.93, building on Monday's 0.1% decline
(http://www.marketwatch.com/story/ftse-100-steps-back-from-record-with-carillion-collapse-in-focus-2018-01-15).
The London benchmark still stands near it all-time closing high
of 7,778.64, hit Friday.
The pound traded at $1.3775, slipping from $1.3782 ahead of the
release of inflation data. Sterling was at $1.3794 late Monday in
New York, after breaking above $1.38 earlier in that session.
What's driving markets: Before finishing lower, the FTSE 100
wobbled in early trading, with the decline for BP shares and the
drop in pound pulling in different directions.
The energy giant said it expects to book a $1.7 billion charge
(http://www.marketwatch.com/story/bp-to-book-17-billion-deepwater-horizon-charge-2018-01-16-34853027)
in its 2017 fourth-quarter results for claims related to the 2010
Deepwater Horizon oil spill. The company has already said it is
likely to take a $1.5 billion accounting charge related to U.S. tax
reform. BP shares have a weighting of 5.1% on the FTSE 100, the
fourth-highest of any individual company, according to FactSet
data.
Stock movers: BP PLC (BP.LN) (BP.LN) lost 2.7% after the
announcement of the Deepwater Horizon charge.
Rio Tinto PLC (RIO) (RIO) (RIO) said it continues to expect
shipments of iron ore from its Western Australia mines
(http://www.marketwatch.com/story/rio-tinto-sees-record-quarterly-iron-ore-shipments-2018-01-16)
will likely rise this year, after record exports in the last
quarter allowed it to hit a target for 2017.
But the miner's shares closed down by 3%, as a downgrade may
have hurt. HSBC analysts cut their ratings on Rio and Anglo
American PLC to hold from buy, saying a recent rally has eroded the
stocks' potential for further growth.
Anglo (AAL.LN) lost 1.6%, and Antofagasta PLC (ANTO.LN) fell
2.8%.
On the upside, shares in Associated British Foods (ABF.LN) added
2.2% following a ratings upgrade to overweight from equal weight at
Barclays.
Advancers also included supermarket chain Tesco PLC (TSCO.LN) ,
higher by 1.9%.
Economic data: U.K. inflation came in at 3% in December
(http://www.marketwatch.com/story/uk-inflation-eases-but-stays-above-boe-target-2018-01-16),
the Office for National Statistics reported, meeting a consensus
estimate from FactSet. The rate compares with a reading of 3.1% in
November.
Average house prices in the U.K. rose 5.1% in November, the ONS
said.
What strategists are saying: "The [inflation] data is unlikely
to greatly sway the Bank of England MPC's current views, although
it is sure to be monitoring the current [pound] rally, continuing
to erode the Brexit inflation of the last 18 months" said Mike van
Dulken and Henry Croft at Accendo Markets.
"More of this could see the U.K. central bank in a position to
hike interest rates sooner than markets are perhaps pricing in,"
the analysts said in a note.
(END) Dow Jones Newswires
January 16, 2018 12:03 ET (17:03 GMT)
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