Profit taking in miners pushes FTSE lower as banks charge higher on reform delay talk

UK investors were enticed into cashing in some of their gains on Thursday after two very strong sessions that helped to rally the FTSE 100 over 5%. The FTSE 100 lost around 30 points by mid morning, though heavier losses were seen in German trade.

It is profit taking in the key miners, one sector which has been a key energy behind this week’s gains, which is the key drag on the UK Index. The mining sector, which has rallied 8.5% this week already, is the key drag, with the FTSE 350 mining sector falling over 2% as investors locked in their gains, particularly with data continuing to come in thick and fast and as positions square up for non farm payrolls tomorrow. With such an emphasis on tomorrow’s payroll data, it is only natural that investors want to downsize the amount of risk in their portfolios today, particularly after such a strong start to the week. Fresnillo, Xstrata and Lonmin were the three top large cap fallers in London trade, falling over 3%.

 Delay in banking reform speculation lifts UK banks
Speculation in the Financial Times that widespread banking reform recommended by the Independent Commission on Banking may have to be delayed until 2015 is helping to spark a relief rally for UK banks, which have helped to prevent a bigger drop in the FTSE today. Stricter regulation and banking reform has been a dark cloud that has been hanging over the major UK banks for much of the year, with investors fearing it may handicap banks from being able to report the size of profits that shareholders were used to before the financial crisis. The report in the FT, whilst not confirmed, is giving hope amongst investors that banks may not be susceptible to such reforms until after the 2015 general election. Shares in RBS, Lloyds and Barclays were the heavyweight leaders in London trade as a result, rising between 4% and 7.7%, as investors bought into the shares on the back of the FT report.

Hargreaves Lansdown rallies 14% on results
Broker Hargreaves Lansdown was the stellar performer on the FTSE 100 after the firm reported a 30% increase in net inflow of funds in July and August, which the firm testifies is evidence of winning client funds from rivals. Hargreaves Lansdown shares have badly underperformed a weak FTSE in August, with shares down over 20% on the month. So the results have certainly encouraged investors to pick up some shares at what they perceive to be cheap levels, particularly with positive broker reactions to today’s results also affirming more confidence.