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Britain’s FTSE underperforms European peers, miners hinder

Britain’s FTSE underperforms European peers, miners hinderBritain’s FTSE underperforms European peers, miners hinder

* FTSE 100 index closes 0.5 pct lower

* Glencore drops after earnings fall

* Rand knocks South Africa-exposed shares

* WPP hits record high after results

By Atul Prakash and Alistair Smout

LONDON, Aug 24 Britain’s blue-chip share index
retreated on Wednesday, underperforming its European peers, as a
sharp drop in metals prices put pressure on the mining sector
and South Africa-exposed stocks fell as the rand slipped.

The UK mining index was down 2.9 percent, the
worst sectoral performer, after copper fell to an eight-week low
as rising inventories in Asian warehouses fuelled concerns about
weaker demand in top consumer China. Prices of some other
industrial metals and gold also fell as the dollar strengthened.

Randgold Resources, Antofagasta, Fresnillo and Anglo American fell between 3.1 percent to
5.1 percent. Glencore was down 3.1 percent with added
pressure from its update showing a 13-percent drop in earnings.

“Miners lost ground following weaker metals prices and a
slump in Glencore profits. Given the recent strong run within
the sector, some profit taking was not unexpected,” Securequity
senior trader, Jawaid Afsar, said.

“However, it seems that the sector is trading near its lows
and any further weakness is likely to be met with fresh buyers.”

The FTSE 100 closed 0.5 percent down at 6,835.78
points after gaining on Tuesday. The commodity-heavy blue-chip
index, which has fallen in five out of the past seven sessions,
was the only major European index to end in negative territory.

South Africa-exposed stocks, such as Old Mutual,
Mediclinic International and Mondi, fell
between 1.6 percent and 4 percent as news that the South African
finance minister had been summoned by police hit the rand.

However, WPP closed 1.9 percent higher after hitting
a record high during the session as it comfortably beat net
sales expectations.

“Advertising is a bellwether for the economy as a whole and
WPP’s performance in the first seven months has been reasonably
strong following a record performance in 2015 and despite
worldwide GDP growth slowing,” AJ Bell investment director Russ
Mould said.

Housebuilders rallied for a second day, reaching their
highest levels since Britain voted to leave the European Union.

Persimmon rose further after posting strong results
on Tuesday, showing resilience to the uncertainty around the
June 23 referendum. It was up 2.2 percent on Wednesday after a
spate of broker upgrades.

“(Persimmon) continues to trade well post-Brexit and at this
stage has seen little impact of the referendum risks on
underlying demand, supported by strong pent-up demand, tight
supply, lower mortgage rates and good mortgage availability,”
Citi analysts said in a note, raising their target price on the
stock and reiterating a “neutral” stance.

Among mid-caps, OneSavings Bank rose nearly 17
percent after reporting a jump in underlying profit, but
remained down 20 percent since the Brexit vote. (Editing by Louise Ireland)

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