Home Economic, Financial news Britain’s FTSE closes flat, miners hit 6-year low

Britain’s FTSE closes flat, miners hit 6-year low

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Britain's FTSE closes flat, miners hit 6-year lowLONDON: Britain’s top share index closed flat on Monday, weakened by U.S. data and by mining companies hitting multi-year lows.

Britain’s FTSE 100 was down 0.44 points, 0.01 percent lower, at 6,550.30 by 1645 GMT. This followed the release of a survey which showed manufacturing activity in New York state at its weakest level since April 2009.

”The drop in new orders means that the economy is struggling on a forward-looking basis, when expectations were for some improvement,” said Atif Latif, director of trading at Guardian Stockbrokers.

“(We’re) seeing some dollar weakness on the headline but overall the equity weakness on this should be short-lived.”

The FTSE 100 fell 2.5 percent last week, following a drop in commodity prices after resource-hungry China devalued its currency, leaving the index 8 percent away from an all-time high hit in April.

Shares in mining companies touched a 6-year low on Monday after the price of copper came under renewed pressure, accounting for around two thirds of the fall in the overall index.

The sector fell as much as 1.6 percent, before recovering slightly to trade 0.9 percent lower.

Mining shares have fallen over 60 percent since the end of 2010 as global demand for commodities has slowed, culminating in a move by China’s central bank to weaken its currency.

“The mining companies have been in a bear market for several years and at some point they will look cheap,” said Manoj Ladwa, head of trading at TJM Partners.

“Hopefully the effects of the yuan devaluation will be fully priced in over the next few weeks or so, and the sector can move back up again.”

Global miner Glencore touched an all-time low after price-target cuts from Exane BNP Paribas and Canaccord Genuity, last trading down 1.6 percent.

Although Canaccord’s new target price of 260 pence was 50 percent higher than Glencore’s market price of 171 pence, analysts at the broker said that they would wait until results due on Wednesday before reviewing its recommendation.

Peer BHP Billiton dropped 1.4 percent after a downgrade by Deutsche Bank.

Among risers, plumbing supplies group Wolseley gained 2.2 percent after Citi highlighted its potential for market share gains, with the bank raising its rating on the stock to “buy” from “hold”.

TUI Travel also rose 1.6 percent, taking its rally since last week – when it said earnings would come in at the top end of forecasts – to over 12 percent. Deutsche Bank was the latest to lift its target price on the stock.

TUI, the world’s largest leisure tourism group, is also considering a spin-off of its non-core assets, which have turnover of about three billion euros ($ 3.3 billion), London’s The Times newspaper reported on Monday.

Traders said such a deal would help TUI to boost its balance sheet.

Copyright Reuters, 2015

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