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FTSE resumes sell-off on oil slide and emerging-market woes
December 17, 2014 / 3:16 PM / 3 years ago

FTSE resumes sell-off on oil slide and emerging-market woes

* Blue-chip FTSE 100 index down 0.9 pct

* Oil firms down, Petrofac falls again

* Dixons Carphone bounces after results

By Atul Prakash and Alistair Smout

LONDON, Dec 17 (Reuters) - Britain’s top share index resumed its slump on Wednesday after recovering the day before, with energy stocks and companies exposed to turbulent emerging markets bearing the brunt of the sell-off.

The blue-chip FTSE 100 index fell 0.9 percent to 6,274.34 points at 1431 GMT after surging 2.4 percent in the previous session, but is down more than 6 percent so far this month because of growth concerns and a sharp drop in oil prices.

A Reuters poll forecast the FTSE 100 would reach a record high by the end of 2015, but uncertainty over the outcome of May’s national election will curb gains early next year.

Oil majors BP and BG Group fell 0.8 percent and 2.6 percent respectively and the UK Oil and Gas index was down 0.5 percent, as crude fell below $59 a barrel after producers hinted they would maintain output despite a glut and weak demand in Russia and Europe.

Developments in Russia also hurt broader market sentiment. Russian assets were volatile again as the Finance Ministry battled to defend the rouble, which has crashed to record lows, hurt by international sanctions and a nearly 50 percent decline in crude oil prices in just six months.

Weakness in Russia has spread to other emerging markets, with the South African rand and Asian shares down. Although few stocks on the FTSE 100 have substantial exposure to Russia, South African paper maker Mondi fell 4.3 percent, the biggest decliner. Asia-focused bank HSBC dropped 1.6 percent to take the most points off the index.

“With the Russian rouble and oil getting smashed, people want to cut some risk from the table going into 2015. The sharp sell-off is sentiment-related,” said Mike Jarman, chief market strategist at H2O Markets.

Lloyds Banking Group was down 0.9 percent. Britain plans to sell more of its shares in the next six months, the body that manages the government shareholding in bailed-out banks said on Wednesday.

Petrofac fell 3.1 percent on weaker oil and after a downgrade to “neutral” from “buy” by Citi. The energy-services company is down about 45 percent this year as the slump in oil raises the prospect oil majors will cut spending on services.

Dixons Carphone bucked the trend, rising 3.4 percent. The electricals and telecommunications retailer posted a 30 percent increase in first-half profit.

Mid-cap Catlin Group rose 10.8 percent after saying it received a takeover approach from XL Group that valued the company at 2.53 billion pounds ($3.98 billion). (Editing by Alison Williams)

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