FTSE falls 0.6% as miners lose ground

<p>The FTSE 100 fell 0.6% in trading on Monday with the UK Index being dragged lower by weakness in heavyweight mining stocks. The FTSE 100 […]</p>

The FTSE 100 fell 0.6% in trading on Monday with the UK Index being dragged lower by weakness in heavyweight mining stocks.

The FTSE 100 lost 38 points by midday in trading with much of the losses being dictated by 2% weakness in the FTSE 350 mining sector. 1% losses in the banking and insurance sector also added to the bearish start to the new trading week in London whilst heavier losses were seen in broader European trade, with the CAC and DAX both falling over 1.2%.

Much of the mining sector weakness in trading has been triggered by a bearish note on the mining sector by bank JP Morgan, who told clients to bank their gains in the sector as stalling global growth continues to bite and likely nullifies the impact of the recently announced Federal Reserve easing measures.

Eyes remain on Xstrata and Glencore however as both firms look set to make a decision on the attempted merger between the two, with the deal seeing additional time in order for an agreement to be reached after Glencore sweetened their offer. Executive pay and the premium on offer to Xstrata shareholders remains two key points of contestation. Both firms shares prices weakened further in trading today, tracking the weaker sector and Glencore’s prices in particular retested support levels of 350p.

German Ifo business sentiment indicator also weighed in trading. The confidence measure fell to 101.4 from 102.3 when a small rise had been expected to 102.5. The data is particularly disappointing as it comes immediately after the ECB announced open ended bond purchases as and when a state requests its support through Outright Monetary Transactions. Equally concerning was the fact that business expectations also came in much weaker than expected, at 93.2 against forecasts of a rise to 95.0. This hurt near term sentiment in trading across Europe as a result.

Pharmaceutical stocks topped the best performers in terms of stock sectors across Europe, with GlaxoSmithKline and Shire both seeing 0.75 gains in their respective share prices. The Dollar Index also saw gains of 0.4% and with these areas both seen as defensive safe haven asset sectors, risk off has firmly been the theme to today’s trading.

There is a lack of economic data due out in the afternoon session and so we could simply be going through the motions as the afternoon session begins. European trading is likely to follow the US, where the Dow Jones and S&P 500 are both expected to open 0.5% weaker.

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