Falling copper price drags FTSE lower

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IOL bus dec23 FTSE

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Britain's top share index fell back in thin early trade on Wednesday as the twin dilemmas of concern over global growth and hopes for central bank stimulus to relieve those worries continued to occupy investors' minds.

Minin stocks led the modest retreat in London, weighed by a fall in the copper price. Global growth worries crimped demand expectations for the metal, particularly with official August PMI data from top metals consumer China expected to hit a 9-month low when released on Saturday.

Among the sector fallers, Antofagasta shed 1.3 percent as the Chilean copper miner posted an in-line drop of more than 7 percent in first-half profit. Falling prices and higher exploration costs denting the impact of increased production from its challenging Esperanza project.

“All-in-all a good set of results but shouldn't draw huge surprise,” Numis Securities said in a note, repeating its “hold” rating on Antofagasta.

Commodities trader Glencore was the top blue-chip faller, down 4.0 percent, having been the biggest FTSE 100 riser on Tuesday, while its takeover target Xstrata fell 2.3 percent.

A Norwegian sovereign wealth fund has opposed the terms of the Glencore's proposed $30 billion takeover of the miner, the Financial Times reported on Wednesday, without citing sources.

Norway joins Qatar whose own sovereign wealth fund investment arm demanded improved terms and threatened to vote against the deal.

Both Glencore and Xstrata shares also traded without entitlement to their latest dividend payments on Wednesday.

Overall ex-dividend factors clipped 1.75 points off the FTSE 100 index on Wednesday, with Croda International, and Legal & General also trading without entitlement to their latest dividend payments.

By 0802 GMT, the FTSE 100 index was down 32.44 points at 5,743.27, or 0.6 percent, after closing 0.02 percent lower on Tuesday. Early blue chip volumes were thin, at 5 percent of the 90-day daily average in the first hour of trading.

“With recent low trading volumes looking set to continue, today promises to be another day of “wait and see” ... Investors hoping that today will bring more excitement than yesterday may be left disappointed,” sad Mike Mason, senior trader at Sucden Financial Private Clients.

SERCO SOUGHT

Among the blue chip gainers, Serco added 0.8 percent, the third biggest FTSE 100 riser, as the outsourcing group said recent contract wins would help it deliver a strong full-year performance, after reorganisation costs and delays in the award of U.S. federal work pushed first half profit down 17 percent.

“Half year results from Serco were in line with expectations ... We believe this guidance is achievable, supported by recent contract wins,” Seymour Pierce said in a note.

Early volume in Serco shares was solid, reaching 23 percent of the 90-day daily average in the first hour of trading.

Reed Elsevier was also in demand, ahead 0.8 percent as JPMorgan Cazenove upgraded its rating for the Anglo-Dutch publishing group to “overweight” with an increased target price of 675 pence.

No important British economic pointers will be released on Wednesday so investors will focus on a batch of U.S. data, including the first revision to U.S. second-quarter GDP numbers, due at 1230 GMT, with weak growth data seen as strengthening the case for further quantitative easing in the U.S. -Reuters


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