LONDON (Reuters) - Britain’s top share index steadied on Wednesday, underperforming European peers, as a drop in energy stock prices prompted by oil price weakness offset a rally led by housing stocks.
The blue-chip FTSE 100 index .FTSE closed flat in percentage terms at 7,188.82 points, after ending marginally higher in the previous session. In contrast, the pan-European STOXX 600 index was up 0.3 percent higher in a choppy session.
Britain's mid cap .FTMC index, however, ended at a fresh record closing level, up 0.3 percent. Housebuilder Redrow (RDW.L) was among the biggest gainers on the FTSE 250, up 4 percent after posting a rise in first half profit.
“We have had a BUY recommendation on (Redrow) for a while and we stick with that both for absolute potential gain and also as part of our wider view that the midcap house builders offer much better value than the larger caps,” Robin Hardy, analyst at Shore Capital Markets, said in a note.
However, commodity-linked stocks fell. After rallying earlier in the session, Rio Tinto (RIO.L) ended 1.7 percent lower, though the world’s No. 2 iron ore miner beat profit forecasts on the back of cost-cutting and a strong recovery in iron ore prices and said it would pay a bigger-than-expected annual dividend.
“Mining companies are price-takers and have no control over commodity markets, but Rio has made ground by cutting cash costs and scaling back the dividend,” Hargreaves Lansdown analyst Laith Khalaf said.
Rio shares have more than doubled since early 2016, and analysts cited some profit-taking on Wednesday after Rio’s shares touched their highest level in four years earlier in the month.
Gains were also negated by weaker energy stocks. The UK oil and gas index .FTNMX0530 fell 1.3 percent after oil prices extended Tuesday’s falls earlier in the session following a massive increase in U.S. fuel inventories and a slump in Chinese demand. [O/R]
“Energy shares have been weighed on by a surprisingly large U.S. API oil inventory build, stoking fears that rising U.S. shale production will outweigh OPEC cuts deigned to rebalance the global oil market,” Accendo Markets analyst Henry Croft said.
Reporting by Kit Rees and Atul Prakash; Editing by Gareth Jones