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Miners hit six-year lows on fresh commodity falls

FTSE 100 scrapes into positive territory despite miners weighing, with shares in Glencore reaching all-time low.

 
Miners hit six-year lows on fresh commodity falls

Update: The FTSE 100 has edged into positive territory despite miners succumbing to a fresh sell-off as commodity prices fell yet again.

Mining shares hit six-year lows, with Glencore (GLEN) falling to its lowest-ever price of 170.5p, down 1.4% on the day and having lost nearly half its value in the space of just over three months.

'Fresh from the sale of more Xstrata assets last week, Glencore shares were leading declines in the weak mining sector ahead of reporting quarterly earnings on Wednesday,' said Jasper Lawler, market analyst at CMC Markets UK.

'Shares have been cut in half in just three months but it's hard to see a bottom while commodity prices keep falling. However, with expectations this low leading into earnings, there's a chance Glencore shares could see a pop after it reports.'

BHP Billiton (BLT) was another faller, down 1.6% at £11.32, as analysts at Exane BNP Paribas and Canaccord Genuity both cut their target prices on the stock.

Miners were also suffering under the weight of fresh falls in the copper price.

But the FTSE 100 withstood the latest slump in mining shares to rise 11 points, or 0.2%, to 6,562. It was helped by a rebound in house builders, which had fallen in the morning's trading after a Bank of England policymaker warned that waiting too long to raise interest rates risked 'undermining the recovery'.

Barratt Developments (BDEV) escaped the red to edge half a penny higher at 654p, Taylor Wimpey (TW) was up by the same amount at 205.4p and Persimmon (PSN) rose 18p to £21.23.

House builders fall on rates warning

(13:20) Shares in house builders have dropped after a Bank of England policymaker warned that waiting too long to raise interest rates risked 'undermining the recovery'.

Home construction firms were among the FTSE 100 fallers on the news, with the UK blue-chip index edging five points lower to 6,456.

Barratt Developments (BDEV) fell 1.2% to 645.5p, Persimmon (PSN) was down 0.5% at £20.94 while Taylor Wimpey (TW) edged 0.3% lower to 204.3p.

Writing in the Telegraph, monetary policy committee member Kristin Forbes struck a hawkish tone. 'Maintaining interest rates at the current low levels during an expansion risks creating distortions,' she said. 'Therefore, interest rates will need to be increased well before inflation hits our 2% target.'

On the FTSE 250, it was a similar story. Bovis Homes (BVS) was among the biggest fallers on the index, down 5.7% at £11.34 despite announcing half-year results in line with expectations. Revenue rose 9% over the period, with operating profits up 6%.

'First-half results from Bovis showed a modest level of progress, but the group is expecting there to be a much bigger weighting to [the second half of the year] for volumes and profits this year,' said Clyde Lewis, analyst at Peel Hunt. 'While it still looks like the group should hit market estimates, we think there is no scope for upgrades.'

Other house builders to fall included:

  • Bellway (BWY) -1.3% at £25.15;
  • Crest Nicholson (CRST) -1.5% at 561.5p;
  • Redrow (RDW) -0.5% at 486.8p;
  • Galliford Try (GFRD) -0.2% at £18.07.

On a subdued day for the FTSE 100, most of the big share price moves were to be found outside the UK blue-chip index. Residential landlord Grainger (GRI) was among the biggest FTSE 250 risers, jumping 3.6% on solid results. Ophir Energy (OPHR) fell to the bottom of the index, 6.6% to 101p after analysts at JPMorgan cut their target price on the stock from 158p to 149p.

Hansard Global (HSD) was the biggest riser on the FTSE Small Cap index, up 5.5% at 115.3p as analysts at Panmure raised their target price on the insurance group to 120p from 113p.

Alternative Investment Market-listed Quindell (QPP) edged 1.1% higher to 94.1p after the embattled insurance claims processor announced the appointment of Indro Mukerjee as its new boss. Mukerjee previously ran Canadian electronics group C-MAC MicroTechnology and replaces Rob Terry, Quindell's founder, who was ousted last November.  

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