Sector movers: Mining and metals shares weigh on London trading

Mining and metals stocks led the London market lower yet again on Friday, making blue chip companies from both sectors carry the can of the biggest fallers for four out of five trading sessions this week.

At 1623 BST, the FTSE 100 was trading down 0.93% or 61.70 at 6593.31, while the FTSE 250 was down 0.63% or 111.52 at 17507.58 with the predictable theme of mining and metals stock taking a hammering with precious and industrial metals trading lower.

As the decline continued, investment bank Macquarie downgraded its full-year aggregate forecast for gold to $1,152 an ounce down from $1,310, suggesting the yellow metal could fall as low as $1,075.

“Gold has always had a dual nature as a currency and a commodity. At present it is not desired in either form as the US Federal Reserve remains on course to raise rates, while physical markets are lacklustre. The price fall has been extreme – taking it to a five-year low - but might not be over yet,” the bank added.

Industrial metals slipped firmly into negative territory with leading futures trading lower on the London Metal Exchange. Past the midway point in trading, three month contracts of primary aluminium (down 0.8%), copper (down 2.1%), lead (down 0.8%), nickel (down 0.8%), tin (down 0.3%) and zinc (down 0.9%) summed up a dire afternoon.

In particular, aluminium and copper were trading at six-year lows of $1637.50 and $5240.25 per tonne respectively.

Invariably, mining and metals stock plummeted. Blue chips Antofagasta (down 5.97%), Glencore (down 4.09%), BHP Billiton (down 3.98%) and Rio Tinto (down 3.62%) made up for four of the five biggest fallers on the FTSE 100.

The biggest FTSE 250 fallers list had a similar theme with midcaps Lonmin (down 17.55%) and Evraz (down 5.07%) finding their place. Oil and gas producers were also in the bearish mix, with blue chips BG Group (down 1.68%), BP (down 1.62%) and Royal Dutch Shell A/B (down 1.58% / 1.61%) trading lower, along with a plethora of mid to small caps as both Brent and WTI oil benchmarks remained below $60 and $50 respectively.

A footnote to bearish market proceedings was provided by the beverages sector with the shares of Diageo (down 2.48%) falling after the US Securities and Exchange Commission said it had launched an investigation into whether the company has been shipping excess stocks to customers to boost its results.

Meanwhile, shares in drinks maker AG Barr fell 3.91% after it said first-half profits would drop by about 5% compared to the year before. Others in the sector including SABMiller (down 1.02%) and Britvic (down 1.00%) were also dragged lower.