RBC downgrades Anglo American to 'underperform'

Mining stocks were out of favour on Tuesday in London with Anglo American in particular being pressured by a downgrade out of RBC Capital Markets.

The broker cut its stance on the stock from 'sector perform' to 'underperform' and dropped its target price from 1,100p to 900p.

"Low bulk prices have been discounted, but now Anglo faces the prospect of weaker contribution from De Beers which will further slow an improvement in the balance sheet," RBC said in a note to clients.

The broker said a potential positive catalyst for the stock could come in an improvement in the balance sheet as a result of higher commodity prices, lower costs or disposals.

Anglo is trading at 15.3 times estimated earnings for the 2015 financial year, RBC said.

Anglo was down 1.9% at 1,143.5p by 09:50, while the wider mining sector on the FTSE 350 was down 1.1%.