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FTSE falls to 1-week closing low, hurt by miners

Published 11/10/2010, 12:55 PM
Updated 11/10/2010, 01:00 PM
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* FTSE 100 off 1 percent

* Miners weak, hit by easing metals prices

* BoE says UK economic outlook uncertain

By Tricia Wright

LONDON, Nov 10 (Reuters) - Britain's top share index fell to a one-week closing low on Wednesday, pressured by miners on fears over softening demand from China after downbeat import data, with worries about Ireland's debt also darkening the mood.

The FTSE 100 closed down 58.25 points, or 1 percent, at 5,816.94. The index ended up 0.4 percent on Tuesday at 5,875.19, having briefly broken through the 5,900 level for the first time since June 2008 earlier in the session.

Miners retreated after a recent advance sparked by the Federal Reserve's decision to pump more cheap money into the economy, led down by platinum miner Lonmin, off 4.7 percent, as metals prices fell.

Sentiment surrounding the sector was soured after data showed October import growth in China, the world's biggest consumer of metals, was slower than expected. Investors were looking ahead to Chinese CPI data, due to be released overnight.

Oil stocks and banks also fell back after recent gains.

"(Investors are) uneasy given ongoing concerns over... Ireland, and there is also some weakness in metals pulling the FTSE back," Mic Mills, head of electronic trading at ETX Capital, said.

"The downward momentum from yesterday appears to be still in evidence this afternoon as investors look to take some profit from the recent rally," he said.

Borrowing costs in Ireland have reached record highs this week as Dublin plans to push through hefty spending cuts and tax hikes in an effort to convince investors it is not on the verge of financial meltdown.

Meanwhile 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, but said the outlook was highly uncertain and it stood ready to change policy in either direction.

ROLLS-ROYCE WEAK

Aero-engine maker Rolls-Royce shed 3.1 percent after Singapore Airlines said it will replace the Trent 900 engines on three of its Airbus A380 planes after finding oil stains on them, almost a week after Australian rival Qantas grounded its A380 fleet after a Trent 900 blowout.

Also Boeing halted test flights of its long-delayed 787 Dreamliner airliner on Wednesday after a test flight powered by Rolls-Royce's latest Trent 1000 engine made an emergency landing in Texas after smoke appeared in the cabin.

Boeing said it had no reason to suspect that the engines had anthing to do with the incident.

Supermarket group J Sainsbury dropped 1.1 percent, handing back some of its recent gains, after meeting first-half profit forecasts.

Scottish and Southern topped the FTSE 100 leader board, up 3.8 percent, after the electricity generator reported half-year results and raised its dividend, with BofA Merrill Lynch upgrading its recommendation on the stock to "buy".

BAE Systems gained 3.1 percent as Investec reiterated its "buy" rating following a "bullish" investor day presentation.

Bunzl, Invensys and Unilever fell after going ex-dividend. (Editing by Greg Mahlich)

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