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Miners and banks drag down FTSE amid Fed fears

Mining companies tumble to bottom of index as metal prices fall, hit by stronger dollar ahead of Janet Yellen speech.

 
Miners and banks drag down FTSE amid Fed fears

Miners have dragged the FTSE 100 into the red, as metal prices were hit by a rally in the dollar ahead of a speech by Janet Yellen in which the Federal Reserve chair could signal further US interest rate rises this year.

The UK blue-chip index fell 35 points, or 0.6%, to 6,071, as a rally in the morning's trading fell away. Miners extended their losses at the bottom of the index, with fallers including:

  • Anglo American (AAL) -5.9% at 471.4p;
  • Glencore (GLEN) -5.7% at 142.6p;
  • Rio Tinto (RIO) -4.5% at £18.50;
  • BHP Billiton (BLT) -4.5% at 744.2p;

Metals, which are priced in the dollar, fell as the US currency rose ahead of Yellen's speech in New York later today.

'Fed chair Janet Yellen's speech in New York today will be of added significance after the hawkish shift in tone from Fed members was followed by data showing weakening US inflation,' said Jasper Lawler, market analyst at CMC Markets.

'The rally in global equities stalled last week when a number of Fed speakers hinted at a rate rise at April's meeting.'

Oil stocks were also hit, as the price of Brent crude fell 2.9% to $39.12 a barrel. BP (BP) fell 2.6% to 344.3p while Shell (RDSb) was down 1.8% at £16.58.

Banks fell into the red after the Bank of England said the outlook for UK financial stability had worsened and moved ahead with plans to require some banks to hold extra capital.

Standard Chartered (STAN) fell 2% to 431.6p, HSBC (HSBA) dropped 1.9% to 429.9p, Royal Bank of Scotland (RBS) was down 1.7% at 219.7p and Barclays (BARC) traded 1.7% lower at 150.1p.

The FTSE 250 mirrored the blue-chip index, with commodities stocks in the red against the backdrop of falling metals and oil prices. Evraz (EVRE) fell 7.9% to 83.8p, Polymetal International (POLYP) was down 5.7% at 664p and Ophir Energy (OPHR) slumped 4.8% to 78.1p.

Among 'small cap' stocks, Premier Foods (PFD) jumped 10.1% to 57.1p as chief executive Graham Darby defended the rejection of a 60p-per-share offer from US rival McCormick & Company (MKC.N) and sad a rival bidder could emerge.

Lakehouse (LAKE) jumped 10% to 49.5p, recovering ground lost on Thursday as the social housing contractors board began its fightback against a shareholder rebellion led by star fund manager Mark Slater.

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