Financial and mining stocks under pressure as Footsie loses ground

FTSE: 6,007.06 (–9.92) Mid-250: 11,737.66 (–28.91) Small Cap: 3,252.96 (–7.48)

THE FTSE 100 circled the 6,000-point mark yesterday as the rally in the banking sector faded into profit-taking and mining stocks were sold off after their sustained gains eased.

There was some support from oil majors as crude prices remained strong, helping the index back over the key level by the close. Overall, it lost 10 points to 6,007.06, a fall of 0.2 per cent.

Banking stocks ran out of momentum, unsettled by news of a fresh downgrade to Portugal’s sovereign debt from Moody’s. It came as the strong run higher – set off by relief at the outcome of the stress tests on the Irish financial sector – had already left the sector looking tired.

Barclays lost 0.5 per cent at 286.75p. Lloyds Banking was 1.2 per cent weaker at 59.62p and Royal Bank of Scotland fell 0.4 per cent 41.67p.

After crude prices reached a record sterling high overnight, with Brent crude trading about the $120 a barrel mark, oil majors provided heavily weighted support to the market. BP rose 1.2 per cent to 474.85p. BG was 0.4 per cent higher at £15.63 and Cairn Energy rose 1.6 per cent to 469.7p, its outperformance helped by expectations that the sale of its Indian assets to Vedanta Resources would be approved within days. Vedanta rose 4.4 per cent to £25.18.

Tui Travel rose 2.4 per cent to 228.5p on hopes that the heavily indebted travel group could have alighted upon a fresh way of disposing of its container shipping business Hapag-Lloyd as an alternative to making an initial public offering in it. Onyx Investments, the Omani state-owned investor, took a 15 per cent stake in the business and there were reports of talks to sell further holdings in it to other foreign investors.

Electricity distributor National Grid came under pressure after analysts at HSBC cut their rating on the stock from “neutral” to “underweight” after the recent strong run for the shares. The bank also pointed out that the benefits of the recent spell of harsh winter weather for the company had only been temporary. The shares fell 1.8 per cent to 589p.

Home Retail rose on talk of bid interest in the mid-cap owner of Argos and Homebase from private equity sources following suggestions of stakebuilding in the company. The stock gained 1.7 per cent to 208.1p. – (Copyright The Financial Times Limited 2011)