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Miners put brakes on the FTSE

by Caelainn Barr on Oct 13, 2011 at 09:40

Miners put brakes on the FTSE

Britain’s FTSE 100 made gains on Thursday morning, hovering around the 5,400 mark once again, despite miners weighing the index down as a result of poor commodity prices.

The UK index of blue-chip shares added 0.16%, or eight points, to 5,449, and the Mid-250 index shed 0.55%, or 57 points, to hit 10,376.

Commodities stocks fell on weakening prices as a report from the International Monetary Fund (IMF) cut growth forecasts for Asia in the coming year, implying less demand for metals.

Three-month copper on the London Metal Exchange (LME) fell 1.6% to 7,406.25, reversing yesterday’s gains of 3.2%. 

The biggest losses were made by miners Anglo American (AAL.L), which fell 76p, or 3.14% to £23.44; Eurasian (ENRC.L), which was down 90p, or 5.5%, to 666p; and Fresnillo (FRES.L), which lost 10p, or 0.6% to £16.56. 

In Europe news that the Commission was outlining a response to the region’s debt crisis with bank recapitalisations boosted markets overnight but raised the issue of increasing Greek 'haircuts' – meaning that holders of bonds from the country won't get the expected returns.  

According to Michael Hewson, market analyst at CMC Markets, the plan, ‘appears to have shifted the discussions onto increasing the private sector involvement with respect to Greek haircuts, with talk of 30-50% haircuts as opposed to the 21% agreed on 21 July’.

UK government bonds settled at their worst level for six weeks as the yield on benchmark 10-year gilts rose 10 basis point to 2.65%.

There were few developments overnight in Slovakia, where policymakers have yet to ratify changes to enlarge the European Financial Stability Facility (EFSF), though it is expected that it will be passed by Friday.

Other stock markets in Europe also fared poorly: Germany’s DAX index lost 0.2% to 5,981, France's CAC 40 index dropped 0.03% to 3,228, and the FTSEurofirst 300 index of top European shares fell 0.33% to 973.

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