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Morning Market: FTSE dips on opening after US racks up losses

UK shares fell at opening with mining shares once again in focus and with investors reacting to the falls seen in the US late last night.

 

UK shares fell at opening with mining shares once again in focus and with investors reacting to the falls seen in the US late last night.

By 08:17am, the FTSE 100 was 0.4% lighter, down 14.59 points at 4,175.52, while the FTSE 250 shed 0.2% or 13.68 points, to 6,258.93.

Overnight US markets lost yet more of their value as huge losses at car-maker Ford and a higher than expected climb in unemployment figures caused investors to end a four-day winning streak in some style.

At close the Dow Jones Industrial Average was down 2.7% while the S&P 500 was 3.3% weaker. Today's main news will be fourth quarter Gross Domestic Product (GDP) number in the US, which is tipped to come in with its worst reading for 26 years.

Back in the UK, miners topped both the risers and fallers, with Xstrata shedding the most among the blue chips – down 3.7% - as  selling continues following its rights issue announcement and strategic update.

Yesterday, the group said it will issue approximately 1.96 billion new shares at £2.10 each to raise approximately £4.1 billion. It angered some investors after adding it would also spend part of the proceeds to buy a thermal coal business from its largest shareholder Glencore for $2 billion.

Peers BHP Billiton and Eurasian Natural Resources Corporation dropped 2% and 1.9%, while travel firms also featured, with TUI Travel and Thomas Cook Group 2.6% and 2.1% lower.

Royal Dutch Shell – which yesterday revealed record yearly profits and reinstated its commitment to keep growing its dividend – was down 1.5% as analysts at Credit Suisse cut their price target on the stock.

On the plus column Rio Tinto – which announced it was selling some of its iron ore assets in a deal worth $1.6 billion – jumped as analysts and investors welcomed the sale, noting the group can use the money to pay down some of its debt.

Its shares climbed 5.9% in reaction, while banks also provided a boost to the index, climbing after yesterday's falls.

Lloyds Banking Group led the index higher, up 7.3%, while Royal Bank of Scotland climbed 6.7% and Barclays gained 5.2%.

On the second line miner Aquarius Platinum dropped 6.1%, topping the losers as it fell alongside larger peers, while asset manager Henderson Group was the top riser - up 23.4% - after cofirming it had made a bid for rival New Star worth £115 million.

In currency markets, the pound lost ground against the dollar, down from $1.4282 to $1.4268.

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