London close: Miners down as copper slips again

The Footsie finished off its lows of the session, down by 19.88 points or 0.32% at 6,275.28.

Miners were at the bottom of the pile on the top flight index on the back of downbeat research notes out of Barclays and JP Morgan and another day of losses for metals' prices.

"The last five years have been the worst period of performance since 1966. Looking forward it is hard to see what might pull the the sector out of its tailspin. A demand shock seems unlikely given the state of China's economy, although there are some signs of near-term improvement (money supply (M2), property starts and total social financing). We would have reverted to our Negative call of 2013-14 if it weren’t for the recent pick up in some Chinese data, plus sector positioning)," the team of analysts led by David Butler said in a research note sent to clients.

As of 16:35 three-month copper futures were 1.2% lower - and at fresh six-year lows - to $4,925 per metric tonne on the LME.

Much weaker than expected China CPI prompts talk of further easing

Data released overnight by Chinese authorities said the country’s consumer price index slowed to a 1.3% year-on-year pace in October (consensus: 1.5%), while producer prices fell at a 5.9% clip, as expected.

Those figures also revealed the first month-on-month drop in consumer prices since May, of -0.3%. It was the 44th straight monthly decline for factory gate prices.

Analysts at Capital Economics said they expected the drop in consumer price inflation to be temporary, pointing out that the bulk of the decline was the result of softer food prices, where the pace of gains retreated to 1.9% year-on-year from 2.7% in the month before.

Similarly, the -5.9% drop in factory prices was mainly attributable to falling commodity prices, the think-tank said, whereas the price of domestic goods was holding up much better than expected.

However, “the window for further interest rate cuts will remain open for some time yet,” Chang Liu, China economist at Capital Economics said in a research report sent to clients.

Policy error by the Fed?

Musing about the ‘market chatter’ surrounding increased expectations for a first interest rate hike from the US Federal reserve in December, Jim Reid at Deutsche Bank said: “We have a bias to believe that a rate hike now would be a policy error mainly because global growth and inflation are so low that you risk activity tipping over into a recession in say 2017. Clearly a lot can happen between now and then but that's our current thinking.

In the absence of economic data in the UK, markets' focus was on the letter sent by David Cameron to European Union president Donald Tusk in which he spelled out the country's conditions for remaining inside the club.

The missive called for curbs on in work benefits granted to EU migrants and less red tape from Brussels.

One dissatisfied Conservative, Bernard Jenkin, angrily stood up in parliament and questioned "is that it? Is that the sum total of the government's position in this renegotiation?"

FTSE 100: Anglo American caves in after negative broker comments

Copper giant Anglo American was the object of negative comments out of JP Morgan and Barclays. "We also explicitly assume the progressive dividend is sacrificed at (or before) full year results. With income support expected to diminish, earnings declining through 2016 and management showing little appetite for a more fundamental restructuring of the business, AAL should, in our view, increasingly be viewed as a highly leveraged play on commodities," the former said. Barclays slashed its target price on the miner to 485p from 625p.

Experian was at the top of the leader board after reporting first half operating earnings (EBITA) of $570m (consensus: $567m), alongside strong cash flow, according to some analysts. The information services company increased its dividend by 2% and hiked its share buy-back programme by $200m to $800m.

Shares of Vodafone shone after the telecommunications company’s first half results beat expectations and it lifted full year guidance.

Broadcaster ITV gained ground after saying it was on track for double digit profit growth for the full year as it posted a strong third quarter book.

National Grid advanced after it announced strong first half earnings growth and confirmed rumours that it has begun to look at potentially selling a majority stake in its gas distribution business and returning the proceeds to shareholders via a likely special dividend.

Plumbing supplier Wolseley slid after its first-quarter update failed to impress, while property developer Land Securities was also under the cosh as its interim net asset value per share missed analysts’ expectations.

Shares in engineering giant Rolls-Royce were on the backfoot after Exane BNP Paribas slashed its price target on the stock to 685p from 840p to reflect an additional pullback in the civil aerospace margin and further pressure on shorter-cycle activities.

Supermarket retailers Morrison and Tesco were hit as Deutsche Bank downgraded its ratings on the stocks, with the latter falling to a ‘hold’ from ‘buy’.

FTSE 250: Broker pulls the plug on Drax

Shares in power company Drax slid after Deutsche Bank cut the stock to ‘sell’ from ‘hold’ as the “power price crunch” worsen.

DCC was a high riser after the distribution and logistics group reported an increase in interim pre-tax profit thanks to an improvement in gross margins, although revenue suffered a slight decline.

Engineering software company Aveva gained ground despite swinging to a pre-tax loss in the first half of the year due to declining oil prices , as it said it hopes to reach definitive terms on the reverse takeover by Schneider Electric in December, with completion by mid-2016.

Market Movers

FTSE 100 (UKX) 6,275.28 -0.32%
FTSE 250 (MCX) 17,039.82 -0.43%
techMARK (TASX) 3,073.38 -0.06%

FTSE 100 - Risers

Experian (EXPN) 1,187.00p 7.52%
Vodafone Group (VOD) 222.80p 3.89%
Inmarsat (ISAT) 1,036.00p 2.17%
Coca-Cola HBC AG (CDI) (CCH) 1,545.00p 2.05%
ITV (ITV) 261.50p 1.83%
International Consolidated Airlines Group SA (CDI) (IAG) 604.50p 1.76%
SSE (SSE) 1,488.00p 1.57%
National Grid (NG.) 909.30p 1.48%
Rio Tinto (RIO) 2,318.50p 1.20%
Berkeley Group Holdings (The) (BKG) 3,132.00p 1.16%

FTSE 100 - Fallers

Anglo American (AAL) 491.75p -4.70%
Wolseley (WOS) 3,630.00p -4.60%
Glencore (GLEN) 105.05p -4.24%
Burberry Group (BRBY) 1,319.00p -4.00%
Prudential (PRU) 1,489.50p -3.90%
Rolls-Royce Holdings (RR.) 672.00p -3.79%
Land Securities Group (LAND) 1,243.00p -2.74%
Morrison (Wm) Supermarkets (MRW) 159.10p -2.63%
Aberdeen Asset Management (ADN) 345.00p -2.51%
Antofagasta (ANTO) 497.70p -2.32%

FTSE 250 - Risers

DCC (DCC) 5,800.00p 8.22%
Greencore Group (GNC) 331.70p 3.81%
Centamin (DI) (CEY) 62.60p 3.05%
Dignity (DTY) 2,581.00p 2.83%
UDG Healthcare Public Limited Company (UDG) 498.10p 2.70%
P2P Global Investments C (P2P2) 974.50p 2.62%
Daejan Holdings (DJAN) 6,125.00p 2.59%
Betfair Group (BET) 3,318.00p 1.84%
Aldermore Group (ALD) 287.20p 1.81%
Supergroup (SGP) 1,606.00p 1.71%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 84.85p -14.85%
Drax Group (DRX) 237.50p -8.34%
Vedanta Resources (VED) 429.00p -7.64%
Tullow Oil (TLW) 213.60p -6.36%
Petra Diamonds Ltd.(DI) (PDL) 64.90p -5.53%
Vesuvius (VSVS) 346.20p -5.46%
Premier Oil (PMO) 73.95p -4.76%
BTG (BTG) 520.50p -4.67%
Allied Minds (ALM) 478.00p -4.05%
Ophir Energy (OPHR) 94.75p -3.33%