FTSE falls and BP suffers after downgrade

Equity markets have remained within a tight range as uncertainty over talks in the US has kept investors cautious. The FTSE inched lower, with BP shares recording one of the biggest declines following a broker downgrade. However despite the index slipping back today, the FTSE has still gained over 0.1% throughout the week.

BP lost 0.6% after Credit Suisse cut its rating for the oil company from outperform to neutral, citing the lack of near term momentum. Royal Dutch Shell, on the other hand, remained flat even though it received a lift from Credit Suisse to outperform from neutral.

On the upside, mining stocks were among the best performers after UBS said that 2013 could see some meaningful upside to commodity prices, especially given the improving and promising pro growth policies seen in both China and the US.

Sticking with China, manufacturing data released showed further improvement and more positive trends as it rose to a 14-month high. The flash manufacturing PMI came in at 50.9, up from a final print of 50.5 in November. This indicator is closely watched for the second largest economy in the world and a figure of over 50 represents an improvement in activity and suggests the recovery in China is gaining momentum. However there is still caution in the air but the news has helped to lift sentiment. The strong news helped to support the rally seen by the miners and Kazakhmys and Rio Tinto both closed up over 1%.

Across the pond a larger than expected drop in US consumer prices helped lead the markets lower in the afternoon, erasing most gains fuelled from the Chinese data. Consumer prices dropped 0.3% in November whilst core prices rose 0.1% or 1.9% throughout the year. The core figure is viewed as a good barometer of long term inflationary trends, which the Fed aims to keep at 2% or less.