Miners and retailers led the FTSE 100 lower in response to slowing global demand for metals and poor UK retail sales figures but another drop in inflation saw the pound recover from weakness in recent days.
The Office for National Statistics said the consumer prices index measure of inflation had fallen to 1.6% in March, down from 1.7% in February, its lowest level since October 2009. Ahead of what are expected to be strong wage data tomorrow, sterling surged 0.15% to $1.6730 against the dollar.
The FTSE 100 dropped 29 points, or 0.4%, to 5,680 with miners among the top fallers as fears over slowing growth in China depressed the sector. Rio Tinto (RIO.L) fell 71p, or 2.1%, to £33.37, as it announced iron ore shipments fell by 8% in the first quarter of the year due to disruptions in Australia and Canada.
BHP Billiton (BLT.L) dropped 28.5p, or 1.5%, to £19.09, although analysts at Liberum remained positive, looking ahead to more details on its growth plans for the second half of the year.
Anglo American (AAL.L) fell 18.5p, or 1.2% to £15.25, as it looks for a buyer for its Rustenburg mine in South Africa.
Glencore Xstrata (GLEN.L) shed 2.4p, or 0.7%, to 315.6p, as it announced a $1.4 billion (£837 million) bid for Canadian miner Caracal Energy, fresh from reaching agreement on the sale of its Las Bambas site.
Supermarket chains WM Morrison (MRW.L), J Sainsbury (SBRY.L) and home improvements retailer Kingfisher (KGF.L) fell between 0.9% and 1.8% as the British Retail Consortium (BRC) announced a 1.7% fall in retail sales last month compared to a year ago. The BRC said the figures had been distorted by a late Easter which curbed children’s clothing, household accessories and furniture sales. ‘Unsurprisingly compared to last year, categories that perform strongly over the extended Easter break have seen lower sales,’ said BRC director general Helen Dickinson. ‘Retailers will be looking forward to April’s results to see how this balances out over the period.'
G4S (GFS.L) was the FTSE's biggest faller, dropping 9.4p, or 3.8%, to 238.6p after analysts at Deutsche Bank downgraded the security group from ‘hold’ to ‘sell’. ‘We do not see significant “hidden value” in G4S to warrant its current valuation,’ they said. ‘We expect a lower group growth profile in this cycle despite benefits from emerging markets exposure.’
Resolution (RSL.L) was the biggest riser, adding 4.9p, or 1.8%, to 286p, after analysts at Barclays argued the market had overreacted to a slew of bad news for insurers. The introduction of a pension fee cap, announcement of a regulatory review of pension sales and Budget changes that will remove the need for many to buy an annuity have all taken their toll on life company share prices. But Barclays argued only the annuity overhaul was likely to have a material impact on Resolution, and that the sell-off of the company, which has its market cap plunge by £1.2 billion over the past month, had been exaggerated. ‘Resolution offers the highest dividend yield in the FTSE 100 of 7.6%, we believe the recent weakness is overdone and we reiterate our overweight rating,’ they said.