UK's FTSE pinned back

A trader monitors the screen on a trading floor in London.

A trader monitors the screen on a trading floor in London.

Published Nov 25, 2014

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London - Commodity related stocks continued to weigh on Britain's top share index on Tuesday, pegging it back near two-month highs as oil and metal prices came under renewed pressure.

Earnings also dragged, with Kingfisher down 2.5 percent after Europe's No. 1 home improvement retailer posted a decline in third quarter profit, hurt by a weak French market and foreign currency movements.

Basic materials and energy stocks combined to trim 14 points off the FTSE 100, which edged 0.15 points lower to 6 729.64 points by 10:40 SA time, lagging European indexes.

Top faller was energy services firm Petrofac, down 3.8 percent and extending its slide this week to almost 30 percent, hit by bank downgrades after guiding for lower profit on Monday.

Other oil firms were under pressure as the prospect supply will remain plentiful knocked Brent crude to $79.20 (R872) a barrel.

Tullow Oil fell 2.3 percent after Societe Generale cut its target price for the stock by 110 pence to reflect a weaker oil price outlook but retained its “buy” rating.

Miners dropped 1.3 percent, and have now given back more than half the 5 percent surge that followed Friday's surprise rate cut in China, the world's biggest metals producer.

“We'd have to see a recovery in the mining stocks to provide the next leg of the rally, but their disappointing performance is a reflection of global demand at the moment,” said Ioan Smith managing director at KCG Europe.

Miners are heavily weighted in Britain's FTSE 100, and while their gains last Friday lifted the index to a two-month high, recent underperformance of commodity-linked stocks means it remains 2.5 percent off a 2014 high hit in September.

Airlines easyJet and IAG rose over 1 percent as they benefited from lower oil prices, while BT continued to benefit from chatter about a strategic tie-up to help it enter the mobile communications market.

The telecom rose 1.6 percent after El Confidencial reported it could offer at least 6 billion euros ($7.5 billion) to Spanish peer Telefonica on top of a 20 percent stake in its share capital for the O2 mobile network. - Reuters

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