MINERS weighed heavily on the FTSE 100 as the biggest one-day fall in three weeks in metals futures markets triggered a bout of profit-taking.
Metals traded nervously on Tuesday as commodities funds opted to lock-in gains in their gold positions, producing the biggest one-day fall in the precious metal in dollar terms in 13 years.
That selling fed through into the Shanghai futures market, with copper and aluminium coming off worst. It sent down BHP Billiton 5 per cent and Rio Tinto 3 per cent as Australian markets closed.
London-listed miners had no choice but to trade lower in sympathy, led by Kazakhmys, the Kazakhstan copper miner, off 32½p at 819½p. BHP faded 37p to 976½p, with Antofagasta off 66p at £20.13, Rio down 74p to £27.81 and Xstrata behind 37p to £15.68.
Anglo American, 75p cheaper at £20.12, came under additional pressure as Citigroup moved from buy to hold on valuation grounds after a 40 per cent rally since September.
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Given the FTSE 100’s high exposure to the mining sector, that activity translated into a 64.9-point deficit in the benchmark index in early trading.
However, Grupo Ferrovial’s bid interest in BAA, up 97½p to 752½p, and reassuring full-year results from Reckitt Benckiser, 43p ahead at £19.78, enabled the FTSE 100 to trim its loss to 21.7 points, closing at 5,725.1.
The approach for BAA proved the perfect excuse for short-term investors to push Lloyds TSB up 9p to 533p amid the conviction that BBVA, which yesterday raised £500 million in the sterling bond markets, will table an offer, leading the next wave of takeovers of UK stalwarts by the Spanish corporate sector.
Bid hopes — specifically, talk of interest from a consortium backed by Kohlberg Kravis Roberts at the 650p level — also bolstered Marks & Spencer, 14¾p dearer at 510p. More sober types pinned the rise on a combination of an upbeat presentation by Stuart Rose, chief executive, at a retail conference in Milton Keynes, and a raised 550p target from Morgan Stanley.
Shire Pharmaceuticals dropped 29p to 875½p before today’s meeting of the US Food and Drug Administration to discuss how best to study the safety of medicines prescribed to children, such as Shire’s flagship Adderall treatment.
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Gallaher eased 5½p to 879p on signs of an incipient price war in the Austrian cigarette market, which accounts for about 7 per cent of the tobacco group’s earnings. ITV lost ½p to 113½p as Merrill Lynch repeated its “neutral” advice in a review of European broadcasters, in which it also trimmed its earnings forecasts by 1 per cent to 2 per cent.
Mystery surrounds the sale of British Land’s Plantation Place office development in the City of London, which has a price tag of more than £500 million. The identity of interested buyers has been kept secret but property market observers said yesterday that Brian O’Donnell, the wealthy private Dublin solicitor who last year bought Columbus Courtyard at Canary Wharf, is in the fray. British Land added 5½p at £11.56.