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 and despite gains for some other
European markets.
The FTSE 100 index fell 0.2% to 5,749.94 in afternoon trading in
London. U.S. stocks struggled for positive ground at the open.
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.
While a test of the year-to-date highs on the FTSE remain a
possibility, traders appear to be "pausing for breath," said
Anthony Grech, head of research at IG Index. "With little
fundamental data due for release today (Friday), the temptation is
probably to start unwinding ahead of the weekend break," he
said.
"The big risk for the FTSE does, however, seem to be its
over-weighting of the mining stocks and with the fortunes of the
sector now clearly being dictated by monetary policy out of
Beijing, any further attempts to rein in Chinese economic growth
could have a very marked effect here in London," said Grech.
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 come 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.
Miners stayed weak in London. Eurasian Natural Resources fell
2%, Lonmin PLC lost 2.3% and Vedanta Resources PLC dropped 2%.
Oil stocks turned around earlier losses, as December crude
futures gained 81 cents to $81.38 a barrel. Shares of Essar Energy
PLC rose 2.3%.
Banks also pushed higher, after spending much of the day in
negative territory, though that didn't help the main index much.
Royal Bank of Scotland Group PLC (RBS) rose 2.6%, and Lloyds
Banking Group PLC added 2.5%.
TUI Travel PLC was a top gainer, up 3%, 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.