London close: FTSE ends lower as mining stocks slump

London stocks lost their steam on Monday as mining stocks dragged the FTSE 100 to finish lower.

Mining stocks led the declines, including Anglo American, Glencore and Rio Tinto, as a turmoil in iron ore prices spread to other commodities.

The DJ Stoxx 600’s gauge of Basic Resource shares nosedived 6.69% to close the day out at 259.01 on the back of weaker than expected data out of Asia’s largest economy and after Chinese regulators warned they might clamp down on speculation further.

At the same time, oil prices reversed earlier gains amid a government shake-up in Saudi Arabia. Saudi Arabia’s veteran oil minister Ali al-Naimi will be replaced by Saudi Aramco chief executive Khalid al-Falih.

Oil was rising earlier on Monday, underpinned by the supply outages due to wildfires in the Canadian province of Alberta and strong Chinese crude import data, which showed a 7.6% increase in April on the year.

However, according to some market commentary traders were reassessing the impact that the wildfires in Alberta would have on the country’s output.

Estimates continued to point to the interruption of over 1.0m barrels of Canadian oil production, the same as at the end of last week.

Overextended positioning in the futures market and a ‘bearish’ report from Genscape, referenced by Reuters, pointing to an inventory build of 1.4m barrels a day at Cushing, Oklahoma - the location at which US WTI futures are priced - were also put forward as triggers for the weakness in oil.

At 1614 BST, Brent crude fell 2.1% to $44.40 per barrel and West Texas Intermediate dropped 1.3% to $44.07 per barrel.

Reports in the afternoon also indicated the wildfires in Alberta, Canada were now moving away from the key oil-producing regions.

Greek reforms

Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, said he hopes a deal to unlock further aid to Greece can be agreed by the end of the month after the nation announced progress on reforms.

Dijsselbloem said Eurogroup talks in Brussels on Monday would be "a first discussion" and is targeting a deal to be finalised by 24 May.

Greece’s parliament on early Monday passed a package of pension and tax reforms to appease the country’s lenders to unlock further bailout cash. The measures will aim to attain savings to meet an agreed 3.5% budget surplus target before interest payments in 2018.

Economic data

German factory orders rose 1.7% year-on-year in March, beating estimates for a 0.1% and following a 0.7% increase a month earlier, according to Destatis.

Eurozone investor confidence rose more than expected in May but remained subdued, according to a report by Sentix on Monday. The investor sentiment index climbed to 6.2 in May from 5.7 in April, beating forecasts of 6.0. However, it remains well below levels recorded last year.

In the UK, house prices fell 0.8% in April compared to a month ago, more than the 0.3% drop expected by analysts and after a 2.6% jump in March, Halifax said. The decline follows the introduction of extra stamp duty for second home owners and buy-to-let investors on 1 April and comes amid uncertainty leading up to the 23 June European Union referendum.

Company news

Greggs gained after reporting a 5.7% rise in like-for-like sales in the first 18 weeks of 2016, despite the tepid conditions on British high streets.

Smith & Nephew jumped after Jefferies upgraded the artificial knee and hip maker to ‘buy’ from ‘hold’ and lifted the price target to 1,375p from 1,044p.

EasyJet soared after RBC Capital Markets upgraded the airline to ‘outperform’ from ‘underperform’ and lifted the price target to 1,500p from 1,450p. Fellow travel firm TUI also rallied ahead of its half year results on Wednesday.

Security firm G4S climbed after saying it has made a positive start to the year despite a challenging backdrop, with no new impairments.

Interserve was in the red as Berenberg cut its target price to 520p from 645p after the company highlighted contractual issues in a trading update.

Oil stocks Royal Dutch Shell and BP dropped on the slide in crude prices.

Market Movers

FTSE 100 (UKX) 6,111.96 -0.22%
FTSE 250 (MCX) 16,676.20 0.16%
techMARK (TASX) 3,064.30 1.06%

FTSE 100 - Risers

AstraZeneca (AZN) 3,945.00p 3.86%
easyJet (EZJ) 1,470.00p 3.81%
TUI AG Reg Shs (DI) (TUI) 1,036.00p 3.60%
Whitbread (WTB) 3,906.00p 2.74%
Berkeley Group Holdings (The) (BKG) 2,984.00p 2.61%
Smith & Nephew (SN.) 1,164.00p 2.46%
Capita (CPI) 1,024.00p 2.40%
Carnival (CCL) 3,531.00p 2.29%
Paddy Power Betfair (PPB) 9,085.00p 2.25%
Sage Group (SGE) 593.00p 2.07%

FTSE 100 - Fallers

Anglo American (AAL) 558.70p -13.97%
Glencore (GLEN) 132.10p -9.27%
Rio Tinto (RIO) 1,963.50p -7.97%
BHP Billiton (BLT) 791.20p -6.33%
Fresnillo (FRES) 1,036.00p -6.07%
Antofagasta (ANTO) 416.40p -5.69%
Standard Chartered (STAN) 478.15p -4.07%
Randgold Resources Ltd. (RRS) 5,940.00p -3.65%
Royal Dutch Shell 'B' (RDSB) 1,714.00p -2.70%
BP (BP.) 352.10p -2.41%

FTSE 250 - Risers

CLS Holdings (CLI) 1,589.00p 5.30%
G4S (GFS) 193.60p 5.05%
Spire Healthcare Group (SPI) 340.00p 4.97%
Hastings Group Holdings (HSTG) 183.00p 3.51%
TalkTalk Telecom Group (TALK) 265.40p 3.27%
Clarkson (CKN) 2,268.00p 3.14%
Greggs (GRG) 1,101.00p 3.09%
Tate & Lyle (TATE) 611.50p 2.95%
Redrow (RDW) 384.60p 2.45%
Polypipe Group (PLP) 288.60p 2.27%

FTSE 250 - Fallers

Evraz (EVR) 117.00p -10.48%
Kaz Minerals (KAZ) 150.60p -10.20%
Centamin (DI) (CEY) 109.60p -9.79%
Vedanta Resources (VED) 353.30p -8.76%
Interserve (IRV) 308.80p -6.23%
Tullow Oil (TLW) 232.20p -5.30%
Ophir Energy (OPHR) 64.80p -4.99%
Allied Minds (ALM) 336.90p -4.88%
Acacia Mining (ACA) 313.40p -4.63%
Amec Foster Wheeler (AMFW) 446.50p -4.21%