Miners drag European Indices lower as Libya concerns weigh on sentiment
City Index March 8, 2011 4:40 PM
<p>Traders sold out of risky asset classes today reacting to escalating fighting in Libya forcing the FTSE 100 and DAX lower between 0.3% and 0.5%. What is notable today […]</p>
Traders sold out of risky asset classes today reacting to escalating fighting in Libya forcing the FTSE 100 and DAX lower between 0.3% and 0.5%.
What is notable today is that despite a 0.5% sell off in the price of both Nymex and Brent crude oil, induced by speculation that OPEC may boost output, this has simply not been enough to wet the appetites of investors to buy back into equities. The last few weeks has seen traders use any fall in the price of crude oil as an opportunity to buy into share weakness in hopes of a short term bounce. That has not happened today which suggests that traders are more concerned about the longer term implications of instability in Libya and the Middle East on the price of crude oil, particularly in the context of Libya seemingly stepping closer to civil war with each new day.
In truth, the FTSE 100 has hit a bit of a wall stopping any further movement to the upside of late. The UK Index has trended sideways within a trading range of 200 points for much of the year and traders are waiting for a break out.
The miners were the key drag on the FTSE 100 Index today with the sector falling over 2% in trading and stocks such as Randgold Resources, Kazakmhys and Antofagasta suffering the most. Randgold Resources shares fell as much as 8.9% on shareholder concern that violence in the Ivory Coast could hit operations there. Randgold’s peer Cluff Gold suspended operations in the country yesterday.
Shares in Pace Group also plummeted 18% today after the world’s largest set top box maker reduced its sales growth target for the year after a large client delayed a big order until 2012. The news weighed on sentiment despite an upbeat outlook for the company and shares quickly traded to its lowest level since the end of January.
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