By Barbara Kollmeyer
MADRID (MarketWatch) -- The U.K. benchmark stock index dropped
on Friday, breaking a two-session winning streak, as mining and oil
firms led the market lower.
The FTSE 100 index fell 0.5% to 5,729.68 in morning trading in
London.
The index rose 0.5% on Thursday to end at 5,757.86, its highest
closing value since April 20. It's gained nearly 4% so far in
October.
"The FTSE once again eyed fresh highs for the year during
yesterday's session and although it may have fallen a little way
short of these levels, the fact remains that traders still seem
convinced that there's further upside in equities," said Ben
Potter, market strategist for IG Markets.
"The repeated mantra of QE [quantitative easing] in the U.S.
seems to be instrumental in driving this latest rally, with Wall
Street rebounding hard off words from the Fed's Bullard that he
wants to see another round of cheap money pumped into the system,"
said Potter.
Federal Reserve Bank of St. Louis President James Bullard said
at a conference on Thursday that he favored open-ended bond
purchases, according to media reports.
IG Markets' Potter said that one weak spot for London markets
was the "likely correlation between the Chinese reining in economic
expansion and the downward pressure that could put on the mining
sector." China lifted interest rates this week in a surprise move.
Any attempts to cool growth are largely viewed as negative for
resource-related stocks because of expectations that China would be
seeking fewer raw materials.
Investors are closely watching all data that comes out of China.
See miners could be a risky short-term bet
The meeting of Group of 20 finance ministers and central bankers
underway in Seoul was also a factor on Friday, as the U.S. dollar
rose on tensions ahead of that meeting. The dollar and gold tend to
move in different directions.
December gold futures fell $7.50 to $1,318.10 an ounce, while
copper futures for December delivery edged down 1 cent to $3.77 a
pound.
All miners were off in London. Eurasian Natural Resources fell
2%, Lonmin PLC lost 2%, Antofagasta PLC slipped 2% and Anglo
American PLC dropped 1.7%.
Oil stocks were also weaker, with Petrofac Ltd. down 1.6% and
Essar Energy PLC down 1.3%. Cairn Energy PLC fell 1.3%.
TUI Travel PLC rose 1.5%, after suffering heavy losses Thursday
on news it will restate 2009 earnings and its chief financial
officer is stepping down.
Citigroup downgraded its recommendations on TUI Travel and
Thomas Cook PLC to hold, saying the tour operators face the dangers
of low growth and capacity risk. Shares of Thomas Cook fell
1.7%.
Shares of British Sky Broadcasting Group PLC edged up 0.4% after
the firm reported a 78% rise in profit for the fiscal first
quarter. Revenue for the group topped forecasts.
Meanwhile, online sports-betting group Betfair priced its
initial public offering at 1,300 pence on Friday, with shares set
to begin officially trading on Oct. 27. That was at the top of its
1,100 to 1,400 pence planned range.
Conditional trading began on Friday and David Buik, strategist
at BGC Partners, said prices pushed to around 1,539 pence.