on Tuesday, weighed by mining stocks after Rio Tinto
posted weak quarterly sales, with trade thin as traders awaited
testimony from the U.S. Federal Reserve chief for insight into
its plans for extra stimulus.
The Anglo-Australian miner, down 2 percent, took 3 points
off the index mid-way through the session following its
production update, leading the sector lower as investors fretted
about sluggish Chinese demand for metals.
Volume in the heavyweight stock was around 40 percent of its
90-day daily average, almost double that for the broader FTSE
'Rio continues to face the industry-wide phenomenon of high
cost inflation. These pressures, together with the strengthening
of the Australian and Canadian currencies, escalating raw
material prices and lower grades have all had a negative impact
on margins,' Jonathan Jackson, head of equities at Killik & Co,
said in a note.
He nevertheless suggested buying the stock on dips:
'We are positive on the stock, and believe it is a highly
liquid way to gain exposure to long-term emerging market growth.
We would therefore use today's share price weakness as a buying
Near midday, the FTSE 100 was down 0.4 percent, or 23.16
points, at 5,639.27 points, but many traders pointed to the weak
trading environment and low volumes, citing uncertainty around
the Fed meeting as just one reason to stay on the sidelines.
Fed Chairman Ben Bernanke speaks to Congress on Tuesday and
Wednesday and could give fresh clues to the U.S. central bank's
plans for additional stimulus in light of recent weak economic
data and the ongoing debt crisis in Europe.
'Things will remain pretty quiet ahead of the testimony,
there is still quite a lot of uncertainty about whether they
have enough data to support another bunch of QE, so someone
would not want to put (on) a big position ahead of it,' said
Louise Cooper, market strategist at BGC Partners.
With earnings season underway and corporate outlooks firmly
in focus, plumbing supplies group Wolseley became the
latest to signal the potential bottom-line hit from economic
weakness in Europe.
The stock, among the top fallers from the open, was down 3.5
percent around midday in volume just off its 90-day daily
average after it said difficult market conditions in continental
Europe were continuing and that it would 'explore strategic
options' for the future of its businesses in France.
The top faller across the market, however, was once again
security firm G4S, down 4 percent in volume more than
double its 90-day daily average to record its fourth consecutive
day of losses as a result of its Olympic contract troubles.
Among the less than 20 percent of firms to post gains by the
half-way point were several heavyweight energy stocks, BP
and Royal Dutch Shell, which were buoyed by a
marginally higher oil price and some positive comment from
'We maintain a positive view on Energy with overweights in
the US, Europe and Asia ex.Japan due to attractive valuations
and our view that the sell-off in oil prices will prove to be
short lived,' analysts at the bank wrote in a note.
(Editing by Simon Jessop and Catherine Evans)
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