FTSE falls as eurozone nerves return

The Ftse 100 drifted steadily lower today in its first opportunity to react after the disappointing Non-farm payroll data from America on Friday. The market then struggled past manufacturing numbers from France showing an unexpected 1.2% decline and a report showing that the French economy neither grew nor shrank in the first quarter.

Focusing on UK equities, Vedanta Resources was a notable mover today loosing over 6% off its value after the miner’s fourth quarter and full year 2012 production release. Despite a record quarterly production of lead, silver, alumina and power, production of iron ore dropped a massive 11% to 4.9 million tonnes and sales were down to 5.2 million from 6.6 million. Iron ore is normally one of the most profitable products for Vedanta accounting for around a third of its profits; however the Indian miner has suffered the recent attempts to reduce illegal mining in the country. Looking more broadly, the mining sector as a whole was under pressure this afternoon as investors turned their backs on riskier assets and looked towards defensive stocks often viewed as safer in the shadow of the US job report released on Friday and eurozone debt fears that persist.

The banking sector also suffered in the hands of traders today, Barclays was down 5.5% and Lloyds down over 4% as nerves re-entered the market as Spanish and Italian debt yields caused concern. The borrowing rates on 10 year bonds were 5.95 per cent, up 17 basis points for Spain and 5.58 per cent up 12 basis points, for Italy. Fears over the eurozone periphery are again coming to the forefront of investors’ minds and this is before the scars have healed from Greece. Investors need to see implementation of the planned austerity measures to calm the nerves that Spain will be next.

On a positive note Randgold had a shining day comfortably holding its position as top of the gainer in the FTSE100 from the open. Randgold jumped up over 10% at one point today on hopes of a settlement in Mali after the resignation of the President on Sunday. The miner, which has two – thirds of its production in Mali has lost around 25% of its value since the 14th March 2012 when the disruption sparked by a military coup began. Randgold had confirmed that the unrest had not significantly affected its operations there but it has not completed its assessment of the impact on costs. The resignation of President Amadou Toumani Toure has paved the way for the soldiers of the coup to restore civilian rule and hand power to the National Assembly. This is positive news for companies operating area and Goldman Sachs raised its target price for Randgold to 5700 from 5500.