Sector movers: Natural resource stocks weigh on London market

Metals, mining and oil and gas stocks continued to weigh on the London market on Wednesday, even though blue chips and midcaps finished marginally in positive territory.

The FTSE 100 ended 0.35% or 21.92 points higher at 6,297.20, while the FTSE 250 was 0.36% or 61.95 points higher at 17,101.77. After two sessions in decline, copper futures saw a mid-week uptick. In late afternoon trading on the London Metal Exchange, the three-month copper delivery futures contract was up 0.5% to $4,938.00 per metric tonne.

However, lead (down 1.0%) stayed in negative territory. Precious metals also continued on a negative patch with spot gold down 0.23% or $2.50 at $1,087.17 extending overnight declines. Spot silver fell 0.46% or seven cents to $14.29 an ounce, while spot platinum was 1.85% or $16.67 lower at $883.73 an ounce.

Meanwhile, the Brent front-month futures contract was down 2.70% or $1.28 to $46.16 per barrel. WTI was 2.6% or $1.18 lower at $43.03 per barrel, with the American Petroleum Institute noting overnight that US crude stocks jumped by 6.3m barrels in the week to 6 November to 486.1m barrels, compared with analysts' expectations for an increase of 1m barrels.

As a consequence, BHP Billiton (down 2.41%) and Royal Dutch Shell ‘A’ (down 1.75%) were among the biggest blue chip fallers. Midcaps Tullow Oil (down 7.49%), Petra Diamonds (down 6.01%) and Hunting (down 4.49%) were among the biggest fallers on the FTSE 250.

Vedanta Resources and Amec Foster Wheeler were other major natural resource related stocks to feel the heat. Supermarkets also traded lower after Sainsbury’s said its like-for-like sales shrank 1.6% in the first half, pushing pre-tax profits down 17.9% lower to £308m. Peers Morrison's and Tesco followed suit.

On the positive side, SABMiller was on the front foot after it confirmed that Belgium-based rival Anheuser Busch-InBev has made a formal offer to buy the London-listed brewer for £44 a share in cash.

The deal, which is expected to complete in the second half of next year and follows months of negotiations and extended deadlines from the Takeover Panel, represents a premium of around 50% to SABMiller’s closing price prior to renewed speculation of an approach.