Edinburgh - Britain's main equity index snapped a four-day winning streak on Wednesday as heavyweight mining stocks were hit by a fall in iron ore prices and disappointing trading updates from Royal Mail and testing firm Intertek.
Royal Mail Group reversed slight early gains to drop 8.9 percent to the bottom of the index.
Although Royal Mail's 21 percent fall in six-month operating profit to 279 million pounds was not as bad as many analysts had feared, it warned that online retailer Amazon's delivery service will more than halve the growth potential for the parcel business of the former state-owned company.
“The outlook is not so positive because of the impact of competition in parcels, where Royal Mail is at a disadvantage,” Jasper Lawler, analyst at CMC Markets, said.
“Amazon just want to expand as quickly as possible, and long term they will be able to control costs better if they don't have to rely on a third party like the Royal Mail.”
Britain's FTSE 100 underperformed European peers, hit by its heavy weighting in commodity-related stocks to fall 10.55 points - or 0.2 percent - to 6 98.58 points at 13:11 SA time.
Shares in miners Anglo American, Rio Tinto and BHP Billiton all fell over 1 percent as China's iron ore futures slid nearly 5 percent to a record low on Wednesday due to a supply glut.
Overall, basic materials companies knocked around 6 points off the FTSE 100.
The FTSE 100 has risen 10 percent since hitting a 16-month low in October, helped by some better-than-expected corporate earnings and a new wave of deal making in Europe and the US.
The fall in iron ore prices “has got the potential to slow down the rally here in the UK because mining stocks make up such a big part of the FTSE,” said Manoj Ladwa, head of trading at TJM Partners, who expects the FTSE to end the year below its current level.
Product-testing company Intertek fell 7 percent after it said it expected full-year organic revenue growth and operating margins to be in line with the previous year. - Reuters