Sector movers: Miners weigh on FTSE, real estate continues to rally

Industrial metals and mining provided the biggest drag on the FTSE on Tuesday, with giants BHP Billiton and Rio Tinto registering some of the biggest losses.

BHP Billiton, by the far the UK's biggest miner, extended Monday's decline, which was driven by the disappointing Australian debut of its spin-off South32. Negative broker comment also took a toll - HSBC downgraded its rating on the stock to 'reduce' from 'hold', while JPMorgan cut its target price for the stock to 1,425p from 1,600p.

Acting as a backdrop, three-month copper futures on the LME dropped by 2.5% to reach $6,216 per metric tonne as a surprisingly strong reading on US housing starts sent the dollar hurtling higher. The upcoming FOMC minutes on Wednesday and Chinese manufacturing sector figures on Thursday were expected to serve as the next potential major triggers for moves in the FX and commodity markets.

Elsewhere, sector peer Rio Tinto was also in the red, despite reaching an agreement with Mongolia to resume work on a delayed $5bn underground copper mine, which is expected to bolster the growth prospects for both the company and the country.

Miners were also weighing on the FTSE 250, with Acacia Mining, Kaz Minerals, Evraz and Petra Diamonds all trading lower.

Investec flagged a dip in base metal prices in China as the driving force begind the sector's weakness. "There is currently a dramatic price disconnect between the price of rebar in China and the price of iron ore CFR China," the broker said in a research note. "In our view something is wrong, and the rebar price is sending a strong message - given that iron ore prices generally slavishly follow the price of rebar."

Meanwhile, the real estate sector continued to rally, buoyed by the Office of National Statistics' report that UK house prices accelerated to rise by 9.6% in 2014. Land Securities, Intu Properties, Hammerson, Savills and Galliford Try were all making gains.

A lack of homes on the market is thought to have pushed prices higher, with home ownership becoming increasingly competitive.

The sector has improved steadily since the Conservative win at the general election, which eliminated investors' fears of Labour's mansion tax and additional rent controls.

Top performing sectors so far today

Real Estate Investment Trusts 3,532.27 +2.56%
Automobiles & Parts 8,564.34 +2.49%
Construction & Materials 4,926.37 +1.83%
Food Producers & Processors 8,032.83 +1.80%
Life Insurance 8,534.20 +1.74%

Bottom performing sectors so far today
Industrial Metals & Mining 1,832.85 -4.76%
Mobile Telecommunications 5,170.36 -2.91%
Mining 14,130.75 -2.48%
Oil Equipment, Services & Distribution 18,856.35 -0.60%
Oil & Gas Producers 7,240.12 -0.45%