London midday: Miners lead stocks lower as oil and metal prices fall

London stocks edged lower on Thursday, led by slide in miners as metal and oil prices reversed the previous day’s gains.

Angtofagasta, BHP Billiton, Glencore and Anglo American were among the fallers on the FTSE 100 after metal prices declined.

Oil prices also snapped its recent rally, with Brent crude down 0.96% to $52.01 per barrel and West Texas Intermediate down 0.74% to $50.85 per barrel at 1120 BST. Prices had jumped on Wednesday after government data showed a drop in US weekly crude inventories.

The Energy Information Administration said crude inventories fell 3.2 million barrels in the week to June 3, compared with analysts' expectations for a decrease of 2.7 million barrels.

Adding to the negative sentiment, European Central Bank president Mario Draghi warned of "lasting economic consequences" of years of weak output.

Speaking at an economic forum in Brussels, Draghi said every effort was needed to be devoted to ensuring productivity was returned to potential.

“With years of weak growth eroding eurozone productivity and potentially elevating the threat of irreversible damage, the European Central Bank remains under immense pressure to act swiftly,” said FXTM research analyst Lukman Otunuga.

“Although the ECB has unleashed a myriad of aggressive stimulus measures in the past to jump-start growth and boost inflation, there continues to be little signs of improvement.”

UK trade, house prices

The UK’s total trade deficit fell to £3.29bn in April from a downwardly revised £3.53bn in March, the Office for National Statistics said. It marked the lowest deficit since September and was better than the £3.55bn predicted by economists.

The deficit in goods alone dropped to £10.52bn in April from £10.64bn a month ago. Economists had forecast a deficit of £11.0bn, broadly in line with the initial March estimate.

Goods export volumes jumped by £2.2bn in April on the month to £26.1bn, the biggest rise since records started in 1998. Imports increased £2bn to £36.6bn.

Dennis de Jong, managing director of UFX.com, said even though the data beat expectations the extent of Britain’s trade deficit will "not make welcome reading for Chancellor George Osborne ahead of what promises to be the most significant month of his time in Number 10".

“With the EU referendum on the horizon, both the Leave and Remain camps will likely look to twist this data to their own ends. Leave will argue the deficit is all the more reason for Britain to focus on trade relationships beyond Europe, while Remain will caution against the damage a Brexit could do to a trade deficit which is already causing concern," he said.

Uncertainty over the EU referendum on 23 June is also expected to hurt the housing market over the next few months, according to a survey.

The Royal Institution of Chartered Surveyors (RICS) said a poll showed most of its members expect prices to fall in the next few months on worries about Brexit and higher taxes on buy-to-let and second home purchases.

The RICS headline house price balance for changes over the previous three months fell to +19% in May from +39% in April, the lowest reading since February 2015. Analysts had expected +35%.

China inflation

China’s consumer price index rose 2.0% year-on-year in May, down from 2.3% growth the previous month, as food prices fell. Analysts had pencilled in a 2.2% increase.

The producer price index remained stuck in negative territory for the 51st straight month, falling 2.8% in May from a year ago, compared to April’s 3.4% dip and analysts’ estimates for a 3.2% decline.

Capital Economics said it expects consumer price inflation to remain near current levels for the rest of the year.

“Admittedly, we expect non-food inflation to rise as the drop in oil prices during the second half of 2015 provides a weaker base for comparison,” said Julian Evans-Pritchard, China economist at Capital Economics.

“In contrast, we anticipate a further recovery in producer price inflation in the coming quarters as commodity price deflation continues to ease, with a return to positive territory by the end of year now looking likely.”

Still to come, US initial jobless claims at 1330 BST and US wholesale inventories at 1500 BST.

Corporate stocks

Home Retail Group gained after saying first quarter sales at its Argos chain grew by 2.6% to £868m with net new space contributing 2.5%, mainly as a result of store openings in the previous financial year. Like-for-like sales grew by 0.1%, although the company said the “cannibalisation impact from the new space added in the previous financial year was around 1% and therefore Argos' underlying like-for-like sales increased by approximately 1%”.

Vodafone slid after it confirmed local rumours surrounding its New Zealand operation, announcing it was merging with local subscription television provider Sky to create an integrated telecommunications and media group. Sky shares advanced.

RPC Group jumped after saying it had agreed a £261m deal to buy British Polythene Industries.

Essentra, supplier of speciality plastic and packaging components, dropped after warning of lower full year adjusted operating profit amid challenging market conditions in filter products and project delays.

Market Movers

FTSE 100 (UKX) 6,243.47 -0.92%
FTSE 250 (MCX) 17,078.96 -0.58%
techMARK (TASX) 3,098.63 -0.90%

FTSE 100 - Risers

BT Group (BT.A) 427.10p 1.18%
Marks & Spencer Group (MKS) 379.50p 1.07%
Sky (SKY) 936.50p 0.86%
SSE (SSE) 1,555.00p 0.84%
Next (NXT) 5,545.00p 0.54%
Intertek Group (ITRK) 3,264.00p 0.52%
Worldpay Group (WI) (WPG) 280.30p 0.50%
Carnival (CCL) 3,366.00p 0.45%
International Consolidated Airlines Group SA (CDI) (IAG) 515.50p 0.39%
Sainsbury (J) (SBRY) 251.30p 0.28%

FTSE 100 - Fallers

Antofagasta (ANTO) 423.10p -6.33%
Vodafone Group (VOD) 221.25p -4.22%
Rolls-Royce Holdings (RR.) 590.50p -3.43%
Johnson Matthey (JMAT) 2,979.00p -3.37%
Anglo American (AAL) 677.90p -2.81%
InterContinental Hotels Group (IHG) 2,598.00p -2.55%
BHP Billiton (BLT) 878.30p -2.52%
Pearson (PSON) 828.00p -2.36%
Glencore (GLEN) 142.40p -2.26%
GKN (GKN) 275.60p -1.99%

FTSE 250 - Risers

Kaz Minerals (KAZ) 160.60p 3.61%
Indivior (INDV) 216.10p 2.90%
RPC Group (RPC) 838.50p 2.82%
Spire Healthcare Group (SPI) 357.60p 2.76%
Aveva Group (AVV) 1,736.00p 2.60%
DFS Furniture (DFS) 300.00p 2.35%
Auto Trader Group (AUTO) 410.00p 1.86%
Ophir Energy (OPHR) 75.85p 1.61%
Entertainment One Limited (ETO) 180.80p 1.57%
Galliford Try (GFRD) 1,297.00p 1.25%

FTSE 250 - Fallers

Essentra (ESNT) 587.00p -29.28%
Allied Minds (ALM) 315.00p -5.86%
Petrofac Ltd. (PFC) 745.00p -4.85%
esure Group (ESUR) 274.40p -4.56%
B&M European Value Retail S.A. (DI) (BME) 283.10p -4.00%
Softcat (SCT) 362.40p -3.39%
Amec Foster Wheeler (AMFW) 447.00p -3.23%
Weir Group (WEIR) 1,285.00p -2.65%
Aberdeen Asset Management (ADN) 276.50p -2.50%
Tullow Oil (TLW) 251.50p -2.29%