London midday: Mining stocks drag markets lower on ECB loan disappointment

Markets had edged higher early on after finishing the previous session at a five-week low, but gains were quickly erased after it was revealed that banks took up fewer-than-expected loans in the European Central Bank’s (ECB) second round of liquidity operations.

The FTSE 100 was down 0.6% at 6,463 by midday, after closing Wednesday at 6,500.04, its worst level since 4 November.

London equities have now fallen for the past four days, wiping 4.2% off the value of the UK’s 100 largest listed companies.

The ECB’s so-called targeted long-term refinancing operations (TLTROs) fell slightly short of analysts’ expectations, with loans totalling €129.84bn of a possible €317bn. Market forecasts for the take-up ranged from as little as €90bn to €250bn with consensus around the €150bn mark.

Despite the negative reaction, economist Jennifer McKeown from Capital Economics said that the low loan uptake “provides further justification, were it needed, for the [ECB] to launch full-blown quantitative easing”. She said that the results showed that banks “do not intend to lend, either because of their own risk aversion or a lack of demand”.

Stocks had risen initially on the back of a Reuters report saying that China told banks to issue more loans in the final months of 2014 to boost lending. The People’s Bank of China has also reportedly relaxed limits on banks’ loan-to-deposit ratios and is allowing lenders to give out a record 10trn yuan (£1.03trn) in loans over 2014 as a whole.

Oil prices stabilised slightly, but were still close to the fresh five-year lows reached on Wednesday - Brent is still below $65 a barrel - after OPEC cut its demand forecast for next year and the US reported a surprise increase in crude stockpiles. Meanwhile, Saudi Arabia’s oil minister questioned OPEC’s need to cut output despite a supply glut.

Mining stocks slump, energy shares rebound

Mining heavyweights Randgold, Glencore, Anglo American and Fresnillo were providing a drag on the FTSE 100 by noon on the back of global growth concerns. Second-tier gold miners Hochschild Mining and Centamin were also falling.

Stocks in the oil producing and oil services sectors were making gains as investors hunted for bargains in the aftermath of a recent sell-off. Petrofac, BP and Shell were all putting in a decent performance.

Distribution and outsourcing group Bunzl fell after saying that full-year underlying revenue growth would be around 2.5%, compared with the 3% increase reported in the third quarter.

Whitbread, the owner of Costa coffee, Premier Inn and Beefeater, also underwhelmed with a slight slowdown in like-for-like sales growth in the third quarter to 6%, from 7% in the first half.

Sports Direct edged higher after announcing that underlying profits rose by a tenth in the first half as decent top-line growth was met with a strong improvement in margins - a result that the sports retailer described as “solid”.

A number of stocks were trading lower after going ex-dividend on Thursday, including Associated British Foods, Aberdeen Asset Management, Babcock and 3I Group.

Market Movers
techMARK 2,901.25 -0.36%
FTSE 100 6,463.35 -0.56%
FTSE 250 15,651.01 -0.55%

FTSE 100 - Risers
Legal & General Group (LGEN) 245.10p +1.57%
Next (NXT) 6,560.00p +1.39%
BT Group (BT.A) 414.00p +0.95%
Persimmon (PSN) 1,570.00p +0.71%
Royal Dutch Shell 'A' (RDSA) 2,048.00p +0.64%
BP (BP.) 402.15p +0.64%
Dixons Carphone (DC.) 432.10p +0.58%
Royal Dutch Shell 'B' (RDSB) 2,108.00p +0.45%
Petrofac Ltd. (PFC) 720.00p +0.42%
Direct Line Insurance Group (DLG) 291.20p +0.41%

FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 419.90p -4.26%
Glencore (GLEN) 295.15p -3.64%
Fresnillo (FRES) 744.00p -3.38%
3i Group (III) 434.00p -3.36%
Babcock International Group (BAB) 1,075.00p -3.33%
Randgold Resources Ltd. (RRS) 4,227.00p -3.29%
Anglo American (AAL) 1,170.50p -3.06%
Bunzl (BNZL) 1,743.00p -2.84%
Antofagasta (ANTO) 706.00p -2.82%
Smiths Group (SMIN) 1,059.00p -2.67%

FTSE 250 - Risers
Kier Group (KIE) 1,483.00p +4.22%
Just Retirement Group (JRG) 144.00p +3.60%
Afren (AFR) 37.36p +3.35%
Laird (LRD) 310.20p +2.31%
Spirent Communications (SPT) 67.60p +2.19%
Wood Group (John) (WG.) 573.50p +1.96%
Bwin.party Digital Entertainment (BPTY) 111.20p +1.83%
Stagecoach Group (SGC) 385.80p +1.74%
Micro Focus International (MCRO) 1,069.00p +1.71%
Brit (BRIT) 253.70p +1.48%

FTSE 250 - Fallers
Bank of Georgia Holdings (BGEO) 1,935.00p -6.02%
Hochschild Mining (HOC) 84.15p -4.38%
Stock Spirits Group (STCK) 243.50p -3.87%
Big Yellow Group (BYG) 571.50p -3.46%
Thomas Cook Group (TCG) 117.80p -3.36%
Centamin (DI) (CEY) 49.55p -3.32%
Vesuvius (VSVS) 424.60p -3.32%
Soco International (SIA) 246.20p -3.26%
Brown (N.) Group (BWNG) 339.00p -3.20%
Supergroup (SGP) 803.50p -3.19%