December 19, 2016 / 10:44 AM / 3 years ago

FTSE nudges higher though banks, Ashtead slide

LONDON (Reuters) - Britain’s top share index edged higher on Monday though falls among mining companies and banks capped gains, while Ashtead Group (AHT.L) was hit by a broker downgrade.

A sign alerting of the opening of markets is illuminated at the London Stock Exchange in London, Britain, November 10, 2016. REUTERS/Peter Nicholls/File Photo

The blue chip FTSE 100 index .FTSE was up 0.1 percent at 7,017.16 points at its close after a choppy session.

The index was led higher by a rise among more defensive stocks, including pharma firms Hikma (HIK.L) and Mediclinic (MDCM.L), as well as Reckitt Benckiser (RB.L) and Unilever (ULVR.L) as investors took profits in banking stocks .FTNMX8350, which gained more than 7 percent last week.

Shares in banking stocks Barclays (BARC.L), Standard Chartered (STAN.L), Royal Bank of Scotland (RBS.L) and Lloyds (LLOY.L) were among the top fallers, down between 1.9 percent to 2.8 percent and tracking a broader decline among European banks .SX7P.

Analysts said that uncertainty among Italian banking shares, in particular regarding a share issue from troubled lender Monte dei Paschi (BMPS.MI), was dampening the sector.

“We’re still waiting to hear whether Monte dei Paschi will be successful in that last-ditch attempt to raise the money it needs,” Mike van Dulken, head of research at Accendo Markets, said. “Until we get more clarity, the bank sector is going to be a little on edge.”

Ashtead Group (AHT.L) dropped 4.8 percent, the top FTSE 100 faller, after UBS downgraded the equipment rental firm to a “sell”. UBS analysts said that pricing pressure was rise for Ashtead, and that they saw a limited benefit from any increase in U.S. infrastructure spending.

Shares in mining companies also came under pressure as the price of copper touched a four-week low.

While shares in British mining stocks have rallied around 96 percent so far this year, analysts at Deutsche Bank highlighted an acceleration or deceleration in Chinese consumption as a key risk for the sector.

“We expect cash to be returned to shareholders, but are concerned ‘house-keeping’ capex could start to creep up and new projects could be approved. We doubt that major M&A will make a comeback, and after the 100 percent rally year to date, we now have little upside to our TPs,” analysts at Deutsche Bank said in a note.

Outside of the blue chips, shares in utility Drax Group (DRX.L) jumped more than 8 percent after an upgrade from SocGen to “buy” from “hold”, and the European Commission approved Drax’s conversion of a third power plant unit to biomass from coal.

Reporting by Kit Rees; editing by Mark Heinrich

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