London midday: Stocks dragged lower by miners and oil producers

Anglo American, BHP Billiton and Royal Dutch Shell were among the biggest fallers on the FTSE 100 at the midday mark as metal and oil prices dropped.

A strong dollar and signs that the global crude supply glut continues sent oil prices lower. Brent crude fell 1.1% to $48.19 per barrel and West Texas Intermediate dropped 1.2% to $47.82 per barrel at 1135 BST.

On the upside, housebuilders dominated the risers as a Treasury analysis tried to convince Britain to vote to remain in the European Union at the 23 June referendum. Chancellor George Osborne warned that leaving the EU would tip the UK into a year-long recession with up to 820,000 jobs lost within two years. Berkeley Group and Travis Perkins rallied.

Echoing Osborne’s remarks, Bank of Japan governor Haruhiko Kuroda told the BBC the possibility of the UK leaving the EU poses a serious risk to the global economy.

Kuroda also defended his negative interest rate policy and said he was willing to loosen monetary policy further if needed to boost the real economy and inflation.

His remarks came as data showed Japan's manufacturing industry fell further into a contraction. The Nikkei flash purchasing managers’ index dropped to 47.6 in May from 48.2 in April, below the 50 level that separates a contraction from an expansion.

Meanwhile the yen strengthened against most currencies after official data showed a surprise trade surplus in April. Japan’s trade surplus came in at 825.5bn yen, well above the market forecast of 535bn yen.

In the eurozone, Markit’s manufacturing PMI dipped to 51.5 in May from 51.7 in April, missing forecasts for a reading of 51.9.

The services PMI for the bloc held at 53.1 in May, slightly below estimates of 53.2.

In the US, St. Louis Federal Reserve President James Bullard said a relatively tight labour market may put upward pressure on inflation, raising the case for higher interest rates.

His remarks come amid speculation of an interest rate hike in June after the minutes of the Fed’s latest policy meeting showed a hawkish stance. The minutes revealed policymakers were open to the possibility of a rate increase next month.

In company news, shares in Royal Mail jumped after RBC Capital Markets raised its rating on the stock to ‘sector perform’ from ‘underperform’ and lifted its target price to 525p from 445p.

Ryanair shares rose slightly after reporting a jump in full-year profit but cautioning that profit growth for this year is likely to be modest.

Mitie Group advanced after saying total annual operating profit grew 100.9% to £112.5m, with basic earnings per share growth of 119.6%. £112.5m, with basic earnings per share growth of 119.6%.

Inmarsat dropped after Morgan Stanley downgraded it to ‘equalweight’ from ‘overweight’ and slashed the price target to 800p from 1,350p as it cut its earnings forecasts for the stock.

ICAP slumped after Credit Suisse downgraded its stance on the stock to ‘neutral’ from ‘outperform’ and cut the price target to 450p from 475p following the full-year 2016 results, with the valuation up with events.

Sports Direct was also lower as Goldman Sachs downgraded the stock to a 'neutral' rating and removed the retailer off its Pan-Europe Buy List after cutting its earnings per share (EPS) forecasts for this and next year.

Market Movers

FTSE 100 (UKX) 6,138.19 -0.29%
FTSE 250 (MCX) 16,967.92 0.27%
techMARK (TASX) 3,076.46 0.24%

FTSE 100 - Risers

Royal Mail (RMG) 508.00p 3.27%
ARM Holdings (ARM) 960.50p 1.69%
Randgold Resources Ltd. (RRS) 6,125.00p 1.58%
DCC (DCC) 6,580.00p 1.46%
3i Group (III) 511.50p 1.19%
Travis Perkins (TPK) 1,882.00p 1.18%
Carnival (CCL) 3,571.00p 1.05%
Sage Group (SGE) 596.00p 0.93%
Berkeley Group Holdings (The) (BKG) 3,232.00p 0.91%
Hargreaves Lansdown (HL.) 1,274.00p 0.87%

FTSE 100 - Fallers

Inmarsat (ISAT) 727.50p -3.64%
Tesco (TSCO) 161.30p -1.83%
Anglo American (AAL) 589.90p -1.73%
Marks & Spencer Group (MKS) 439.00p -1.28%
Burberry Group (BRBY) 1,081.00p -1.28%
BHP Billiton (BLT) 807.60p -1.26%
Royal Dutch Shell 'A' (RDSA) 1,659.00p -1.25%
Royal Dutch Shell 'B' (RDSB) 1,668.00p -1.24%
Aviva (AV.) 431.60p -1.15%
SSE (SSE) 1,518.00p -1.11%

FTSE 250 - Risers

CLS Holdings (CLI) 1,592.00p 3.38%
IP Group (IPO) 156.30p 2.90%
Countrywide (CWD) 370.60p 2.57%
Shawbrook Group (SHAW) 287.00p 2.39%
Mitie Group (MTO) 280.10p 2.38%
Weir Group (WEIR) 1,258.00p 2.36%
Redrow (RDW) 416.50p 2.36%
BTG (BTG) 662.50p 2.32%
Homeserve (HSV) 427.70p 2.30%
McCarthy & Stone (MCS) 237.20p 2.24%

FTSE 250 - Fallers

ICAP (IAP) 408.60p -5.35%
Allied Minds (ALM) 323.40p -3.84%
Sports Direct International (SPD) 354.90p -3.82%
Tullow Oil (TLW) 240.90p -2.47%
Restaurant Group (RTN) 343.80p -2.36%
Ocado Group (OCDO) 264.40p -1.93%
Ophir Energy (OPHR) 68.30p -1.87%
Barr (A.G.) (BAG) 537.00p -1.83%
Wood Group (John) (WG.) 616.50p -1.67%
Cobham (COB) 158.70p -1.61%