💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Miners pull FTSE lower; caution ahead of US GDP

Published 01/28/2011, 04:31 AM
Updated 01/28/2011, 04:36 AM
GC
-

* FTSE 100 down 0.6 percent

* Miners weak, metals softer

* British data weak, U.S. GDP awaited

By Simon Falush

LONDON, Jan 28 (Reuters) - Weakness from miners, dented by retreating metal prices, dragged Britain's top shares lower early on Friday, with weak domestic data adding to the cautious tone ahead of quarterly U.S. growth figures.

Heavyweight mining stocks were the biggest drag on the index, pulled lower as jitters about prospects for the economic outlook ahead of U.S. growth data depressed metal prices.

BHP Billiton lost 2.3 percent and Vedanta Resources fell 1.8 percent.

By 0905 GMT the FTSE 100 was 37.81 points, or 0.6 percent, lower at 5,927.27 after it edged 0.1 percent lower on Thursday. The index has held firm in a narrow range in 2011.

"The market is lacking much direction, it is easier to take profits than anything else, and consumer confidence has not helped at all," said Keith Bowman, analyst at Hargreaves Lansdown.

British consumer confidence tumbled to its lowest in almost two years in January, hit by rising inflation, a increase in value-added tax and a looming programme of public spending cuts, the monthly GfK NOP survey showed.

This helped push retailers lower for a second day after Hennes & Mauritz posted a surprise fall in fourth-quarter profit. Iconic high street food and clothing retailer Marks & Spencer fell 1.4 percent while home improvements chain Kingfisher lost 0.9 percent.

Energy stocks were generally lower, but BG Group was among the top gainers, up 1.1 percent after Goldman Sachs increased price targets and Citigroup assumed coverage.

The energy company is up around 7 percent this week after it announced the discovery of light oil offshore Brazil.

U.S. GDP AWAITED

Investors were reluctant to take big positions ahead of U.S. fourth-quarter GDP, scheduled for release at 1330 GMT.

The U.S. economy probably gathered speed in the fourth quarter, with the biggest gain in consumer spending in four years offering the clearest signal yet that a sustainable recovery is underway.

The economy grew at a solid 3.5 percent annual rate in the final three months of 2010, according to a Reuters survey, after expanding at a 2.6 percent pace in the third quarter.

"Some traders feel (the growth expectation) is a little over optimistic given (that) the lingering unemployment rate and depressed housing market are still major issues for the U.S. economy," Jonathan Sudaria, a dealer at Capital Spreads, said.

"Earlier comments this week from the FOMC statement about the fragility of the U.S. recovery have also caused traders to refrain (from) getting too bullish ahead of the figure," he said.

Technical analysts said charts point to a bearish outlook for the blue-chip index.

"Wednesday's rally stopped at 6,003.28 and the market closed below the lower end of the retracement zone at 5,965.88 on Thursday," said James Hyerczyk, analyst at Autochartist.

"The weak close may be indicating that traders are reluctant to chase this market higher and could be waiting for a substantial break to drive this index into a more attractive value area." (Editing by Hans Peters)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.