London - Britain's main equity index fell for a fourth day on Friday, pulled down by commodity stocks as iron ore plunged while a rise in the US dollar also weighed on mining shares.
The blue-chip FTSE 100 index, which hit a record intraday high of 7,065.08 points on Tuesday, fell 0.2 percent to 6,881.58 points - on track for a weekly loss of 2 percent.
Iron ore futures in Asia slid on the prospect that global producers would continue to lift supply.
The head of Rio Tinto, the world's second-largest iron ore miner, also dismissed as “harebrained” a suggestion by smaller rival Fortescue Metals of a way to boost prices.
Rio Tinto fell 2.3 percent while rival miner Anglo American retreated 4 percent, making Anglo American the worst-performing FTSE 100 stock in percentage terms.
Traders added that a rise in the dollar was also impacting the commodity sector.
The dollar extended a rebound as US Federal Reserve officials reiterated they were on track to raise interest rates this year, and a stronger dollar often erodes the purchasing power of those paying for commodities with other currencies.
Mining stocks count for around a tenth of the FTSE, and their weakness meant the UK market underperformed gains on rival European markets.
“The return of dollar strength has seen commodity prices take a tumble, and subsequently the heavy weighting of the mining sector in the FTSE has seen it struggle to keep pace with more sprightly European equity markets,” said IG market analyst Alastair McCaig.
Oil majors such as BP and Royal Dutch Shell were also impacted by a fall in oil prices. Crude dropped more than $1 after a two-day rally, which had been fuelled by geopolitical tensions in the Middle East.
Goldman Sachs said military strikes in Yemen would have little effect on oil supplies as Yemen was only a small crude exporter and tankers could avoid its waters.
Drugmaker Shire outperformed to rise 1.2 percent after UBS increased its price target on the stock, while Vodafone rose 1.1 percent after paying less money than investors had forecast in an Indian airwaves auction.
Joe Rundle, head of trading at ETX Capital, expected the FTSE's pullback to be relatively short-lived since record low UK interest rates and an economic recovery would continue to support the stock market.
“We have a continuation of the pullback today but I do think we're going to see a leg upwards next week.”
Reuters