London close: Equities dragged lower by commodity producers
UK equities were led lower by a slump in commodities stocks on Wednesday as oil prices retreated.
The FTSE 100 closed down 0.85% to 6,958.09 points.
Antofagasta was one of the biggest fallers on London's top tier index after disappointing production numbers and full-year guidance.
Shares in Anglo American, BHP Billiton and Royal Dutch Shell joined in the decline as oil and precious metal prices fell.
Oil prices were under pressure as investors´ faith in a deal to curb production at next month’s OPEC meeting flagged after Iraq said it was unlikely to participate in the proposed agreement.
Brent crude slid 0.83% to $50.37 per barrel while West Texas Intermediate declined 0.46% to $49.73 per barrel at 1642 BST.
Data from the Energy Information Administration on Wednesday showing US weekly crude inventories fell by 0.6m barrels to 468.2m barrels last week failed to lift prices.
Meanwhile, Lloyds Banking Group slumped after setting aside a further provision of £1bn in compensation for mis-selling payment protection insurance during the third quarter of the year.
Whitbread continued to fall following its mixed interim results on Tuesday, with some broker downgrades hitting the shares. Société Generale cut its target price but maintained its 'hold' rating as results were in line with or slightly above consensus estimates.
On the upside, Tesco and Sainsbury’s rallied after Goldman Sachs raised its target price on the stocks but reiterated a ‘sell’ rating, saying British supermarkets do not offer a good reward for risk trade-off as inflation is expected to rise post Brexit.
Luxury fashion company Burberry gained after well-received third quarter earnings from sector peer Kering’s Gucci brand. Gucci, which accounts for 60% of Kering’s operating profit, reported double-digit quarterly sales growth for the first time since 2012.
On the macro-economic front, the pound edged higher against the dollar after hopes of a Bank of England interest rate cut next week faded. The pound rose 0.37% to $1.2233 at 1649 BST.
BoE Governor Mark Carney on Tuesday said the recent weakening of sterling would be taken into consideration at next week’s interest rate decision.
“The concept of a ‘hard Brexit’ has largely been internalised and as such the current focus is upon monetary policy, which seems unlikely to change anytime soon, if comments from Mark Carney are anything to go by,” said IG’s Joshua Mahony.
“With the pound already incredibly low by historical standards, the prospect of cost-push inflation, coupled with a global trend of rising CPI readings, it is unlikely we will see the BoE implement any new easing measures for the foreseeable future.”
In economic data, the British Bankers' Association (BBA) revealed mortgage approval numbers in September of 38,252, which was up from 37,241 in August but down 14.9% from the same month a year ago. The BBA also said consumer credit was growing at its fastest rate since December 2006, with annual growth of over 6% despite only moderate retail sales growth.
German consumer confidence is seen falling to the lowest level in six months in November due to a weak outlook on global economic growth, a separate survey revealed. GfK’s forward-looking consumer confidence index declined to 9.7 points in November from 10.0 in October. Economists had expected no change.
In the US, the advanced trade report for goods showed a deficit of $56.1bn in September compared to $59.1bn August, the government said.
Markit’s flash US services purchasing managers’ index printed at 54.8 in October, up from 52.3 the month before and above the 50 level that indicates an expansion in activity. Economists had expected no change. It marks the highest reading since November 2015 and contrasts with the subdued growth patterns seen through the third quarter of 2016.
The Commerce Department reported that wholesale inventories for September rose 0.2% to $590.7bn, while the international trade deficit fell to $56.1bn from $59.1bn from August.
Separately, the Commerce Department revealed US new home sales for September revealed rose 3.1% from August to a seasonally adjusted rate of 593,000. Economists had expected 590,000 sales.
Market Movers
FTSE 100 (UKX) 6,958.09 -0.85%
FTSE 250 (MCX) 17,675.76 -0.71%
techMARK (TASX) 3,411.39 -0.57%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 422.30p 5.10%
Marks & Spencer Group (MKS) 342.80p 2.51%
easyJet (EZJ) 944.00p 2.05%
Tesco (TSCO) 213.55p 1.62%
Barratt Developments (BDEV) 475.90p 1.47%
Sainsbury (J) (SBRY) 243.40p 1.33%
Burberry Group (BRBY) 1,476.00p 1.10%
Lloyds Banking Group (LLOY) 55.88p 0.96%
Royal Bank of Scotland Group (RBS) 193.60p 0.68%
Associated British Foods (ABF) 2,456.00p 0.66%
FTSE 100 - Fallers
Whitbread (WTB) 3,528.00p -4.62%
Antofagasta (ANTO) 523.50p -3.15%
British American Tobacco (BATS) 4,583.00p -2.87%
Micro Focus International (MCRO) 2,115.00p -2.67%
Johnson Matthey (JMAT) 3,366.00p -2.43%
Ashtead Group (AHT) 1,276.00p -2.22%
Royal Dutch Shell 'B' (RDSB) 2,135.50p -2.15%
Glencore (GLEN) 240.85p -2.15%
Land Securities Group (LAND) 1,003.00p -2.15%
Fresnillo (FRES) 1,608.00p -2.13%
FTSE 250 - Risers
Vectura Group (VEC) 140.00p 7.12%
Petra Diamonds Ltd.(DI) (PDL) 157.20p 4.45%
Sports Direct International (SPD) 284.40p 3.23%
FirstGroup (FGP) 108.00p 3.05%
Thomas Cook Group (TCG) 70.00p 2.94%
Keller Group (KLR) 691.50p 2.75%
Inmarsat (ISAT) 708.50p 1.94%
UDG Healthcare Public Limited Company (UDG) 662.50p 1.84%
Entertainment One Limited (ETO) 236.50p 1.55%
ICAP (IAP) 493.90p 1.54%
FTSE 250 - Fallers
Petrofac Ltd. (PFC) 869.00p -3.98%
CLS Holdings (CLI) 1,522.00p -3.67%
BGEO Group (BGEO) 2,945.00p -3.54%
Just Eat (JE.) 505.50p -3.25%
Morgan Advanced Materials (MGAM) 269.20p -3.17%
Cairn Energy (CNE) 207.00p -3.09%
Hunting (HTG) 508.00p -3.05%
Spectris (SXS) 2,093.00p -2.83%
Auto Trader Group (AUTO) 367.00p -2.68%
Henderson Group (HGG) 238.40p -2.65%