UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Miners pull back as rising dollar hits commodity prices

U.K. stocks struggled to find momentum Thursday, even as bank shares rose after the U.S. Federal Reserve hinted at an interest-rate rise and announced it would begin paring the size of its balance sheet next month.

After swinging between gains and losses throughout the day, the FTSE 100 index ended 0.1% lower at 7,263.90.

After trading in London closed Wednesday, the Fed said it would begin to shrink its huge $4.5 trillion balance sheet in October (http://www.marketwatch.com/story/feds-yellen-says-low-inflation-a-mystery-but-not-mysterious-enough-to-keep-rates-low-2017-09-20). The U.S. central bank also signaled plans for one more increase in interest rates before the end of 2017, which should lift borrowing costs for auto loans, mortgages and business loans. Fed policy makers also hinted at another three rate increases in 2018.

"This may have surprised investors looking for a downward revision in the rate path due to the recent soft patch in inflation. As a result, the probability for another rate hike by December jumped to 70%, and the market bought dollars aggressively," said Charalambos Pissouros, senior analyst at IronFX, in an note.

Bank boost: The prospect of higher interest rates boosted bank stocks on Wall Street (http://www.marketwatch.com/story/financial-stocks-spike-up-after-fed-with-bank-of-america-and-wells-fargo-shares-swinging-higher-2017-09-20), and similar shares in U.K. and Europe followed suit. In London, Barclays PLC (BCS) (BCS) gained 2.4% Royal Bank of Scotland Group (RBS.LN) (RBS.LN) rose by 1.6%.

Lloyds Banking Group (LLOY.LN) (LLOY.LN) picked up 2.7%, while Standard Chartered (STAN.LN) ended 0.5% higher.

Mining down: Meanwhile, shares of miners fell, as commodity prices came under pressure from a rise in the U.S. dollar after the Fed's announcement. Gold , which like other metals is priced in dollars, slumped more than 1%.

Shares of gold producers Fresnillo PLC (FRES.LN) and Randgold Resources PLC (RRS.LN) (RRS.LN) lost 2.2% and 2.3%, respectively. Antofagasta PLC (ANTO.LN) dropped 2.3% and Rio Tinto PLC (RIO) (RIO) (RIO) declined 1.2%.

But Anglo American PLC (AAL.LN) rose 2.9%, after the family trust of Anil Agarwal, the founder of India's largest mining company Vedanta Resources PLC, revealed plans to ramp up its investment in the mining heavyweight by as much as $2 billion (http://www.marketwatch.com/story/agarwal-plans-2-bln-boost-to-anglo-american-stake-2017-09-21). That would make Volcan Investments Ltd., the largest stakeholder in Anglo American.

Stock movers: Capita PLC shares (CPI.LN) tumbled 12% after the outsourcing and professional services company posted a 26% fall in pretax profit for the first half of the year (http://www.marketwatch.com/story/capita-profit-falls-26-but-trading-in-line-2017-09-21). It did say that trading was broadly in line with expectations.

CRH PLC (CRG.DB) gained 2.4%. The Irish building materials supplier said it has agreed to buy Ash Grove Cement Co (http://www.marketwatch.com/story/crh-agrees-to-buy-ash-grove-cement-in-35-billion-deal-2017-09-21).(ASHG) in a deal valuing the U.S. cement provider at $3.5 billion, the companies said. (http://www.marketwatch.com/story/crh-agrees-to-buy-ash-grove-cement-in-35-billion-deal-2017-09-21)

Johnson Matthey PLC (JMAT.LN) soared 15% after the catalyst maker revealed plans to tap into the electric car battery market and backed its guidance for fiscal 2018 (http://www.marketwatch.com/story/johnson-matthey-sees-sales-growth-backs-guidance-2017-09-21).

Pound holds: Sterling managed to hold to slightly higher ground Thursday. The pound was buying $1.3572, compared with $1.3494 late Wednesday in New York.

(END) Dow Jones Newswires

September 21, 2017 12:14 ET (16:14 GMT)

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