August 22, 2016 / 9:19 AM / a year ago

Weaker commodity-related stocks push FTSE to two-week low

A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain August 24, 2015. REUTERS/Suzanne Plunkett

LONDON (Reuters) - Britain’s top share index slipped to its lowest level in nearly two weeks on Monday, with commodity-related stocks leading the market lower following a drop in metals and crude oil prices.

The commodity-heavy FTSE 100 ended 0.4 percent weaker at 6,828.54 points after hitting a low of 6,812.07, the lowest since Aug. 9. The index has fallen 2 percent in a week.

The UK mining index fell 2.7 percent after copper hit a five-week low as the dollar gained on hawkish comments from a Fed official and inventories rose. Other industrial metals and gold also fell sharply.

Shares in Anglo American, Fresnillo, Randgold Resources, Antofagasta and Glencore declined between 2.5 percent and 5.9 percent.

The oil and gas index dropped 1.5 percent after crude oil prices fell nearly 3 percent as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth consecutive week and prospects emerged for higher exports from Iraq and Nigeria.

“A more hawkish tone from a succession of Fed officials along with a sharp slide in oil prices has seen the FTSE 100 feeling the worst of the declines due to weakness in the mining and oil and gas sectors,” said Michael Hewson, analyst at CMC Markets, referring to the FTSE’s underperformance against a flat STOXX Europe 600 index.

“(However) housebuilders have managed to attract some further buying interest. Some of the more bearish sentiment surrounding the UK economy and the housing market appears to be dissipating as a host of economic forecasts dial back their more bearish outlooks for the UK economy.”

Shares in housebuilders Taylor Wimpey, Barratt Developments and Berkeley Group gained between 2.5 percent and 3.5 percent.

The shares had fallen heavily following the UK’s vote to leave the European Union in June. They have since risen off 2016 lows but are yet to break above their pre-Brexit levels.

“On the one hand you’ve got the possibility of an economic downturn, but equally you’ve got really low mortgage rates, and you also have a very large imbalance in the supply and demand of housing ... and that’s going to help support property prices,” Laith Khalaf, senior analyst at Hargreaves Lansdown, said.

Editing by Robin Pomeroy

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below