LONDON MARKETS: FTSE 100 Closes Down As Dollar Strength Hobbles Miners
August 30 2016 - 12:46PM
Dow Jones News
By Carla Mozee, MarketWatch
Bunzl raises dividend payment; mortgage approvals hit 18-month
low
Stocks in the U.K. ended modestly lower in choppy trade Tuesday
as mining shares slumped as the dollar strengthened to multiweek
highs, dragging down commodities priced in the currency.
The FTSE 100 lost 0.3% to finish at 6,820.79. Trading was closed
Monday for a late-August bank holiday.
While a stronger U.S. economy should be supportive for global
growth, the FTSE 100 on Tuesday was "held back by a strong dollar,
with the fallers' board looking like a who's who of mining firms,"
said IG market analyst Joshua Mahony in a note.
In the mining group, shares of copper producer Antofagasta PLC
(ANTO.LN) dropped 5.4%, Randgold Resources PLC (RRS.LN) lost 4.1%
and iron-ore miner Rio Tinto PLC (RIO)(RIO) (RIO) ended the session
4.7% lower.
Offering an upbeat glimmer, shares of Associated British Foods
PLC (ABF.LN) rose 3.4% as RBC raised its rating on the company,
which runs sugar operations and the retailer Primark, to outperform
from sector perform.
Bunzl PLC (BZLFY) shares rose 1.4% after the maker of coffee
cups and mops raised its interim dividend payment
(http://www.marketwatch.com/story/bunzl-reports-rise-in-first-half-profit-2016-08-30)
and posted a 6% rise in first half pretax profit of GBP155.6
million ($203.88 million).
On Friday, the U.K. benchmarkrose 0.3%
(http://www.marketwatch.com/story/ftse-100-slips-but-miners-find-relief-after-selloff-2016-08-26)
after Federal Reserve Chairwoman Janet Yellen said the U.S. economy
looks ready to withstand higher interest rates, which elevated
expectations for rate increases in the U.S.
"The devaluation of gold, silver, copper and iron ore in the
wake of Friday's dollar rally is expected to provide a drag for
days to come, with only crude prices remaining surprisingly
resilient amid something of a bloodbath for commodity stocks," he
said.
A higher dollar makes dollar-denominated commodities like copper
more expensive for holders of other currencies to purchase.
Precious-metal producer Fresnillo PLC (FRES.LN) slumped 5.6% and
Glencore PLC (GLEN.LN) was off 4.3%, adding to last week's loss of
1.9% after the miner and commodities trader posted a $369 million
half-year net loss
(http://www.marketwatch.com/story/glencore-steps-up-debt-cuts-as-it-swings-to-loss-2016-08-24).
Oil prices
(http://www.marketwatch.com/story/oil-prices-nudged-higher-by-bargain-hunting-2016-08-30)
eventually turned lower . But shares of major oil companies were
mixed. BP PLC (BP.LN) was down 0.3% while Royal Dutch Shell PLC
(RDSB.LN) (RDSB.LN) rose 0.3%. Shell said Monday it reached a deal
to sell certain assets in the Gulf of Mexico for $425 million to
EnVen Energy Ventures LLC, an affiliate of Houston-based EnVen
Energy Corp.
As the dollar advanced, the pound was trading at $1.3090, down
from $1.3113 late Monday.
Housing: Meanwhile, shares of home builders retreated after the
Office for National Statistics said the number of new mortgages
approved in the U.K. fell in July to 60,912, the lowest level in
more than a year.
(http://www.marketwatch.com/story/uk-mortgage-approvals-at-lowest-in-18-months-2016-08-30)
Taylor Wimpey PLC's stock (TW.LN) fell 2.2%, Berkeley Group
Holdings PLC (BKG.LN) was off 2.4%, Persimmon PLC (PSN.LN) was
pushed 2.7% lower and Barratt Developments PLC (BDEV.LN) lost
1.4%.
Read:Berkeley Group set to leave FTSE 100; Polymetal to rejoin
(http://www.marketwatch.com/story/berkeley-to-leave-ftse-100-polymetal-to-rejoin-2016-08-30)
The British housing market has "not seized up by any means...but
there are signs the Brexit vote has exerted a severe shock," wrote
Neil Wilson, markets analyst at ETX Capital.
"Prices have so far held up pretty well but this decline in
approvals suggests this situation may not last, particularly as the
unemployment rate is expected to tick upwards and a weak pound hits
people in their pockets," he said.
(END) Dow Jones Newswires
August 30, 2016 12:31 ET (16:31 GMT)
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