LONDON (Alliance News) - The FTSE 100's run of losses extended to eight consecutive sessions Monday, with oil prices hitting fresh seven-year lows and with mining stocks at the coal face of the market turmoil.
Few market participants proved willing to take big risks ahead of the US interest rate decision due on Wednesday.
The FTSE 100 had begun the day positively and managed to tread water for most of the session before giving up the ghost towards the close. London's blue-chip index closed down 1.3% at 5,874.06 points, its lowest close since December 2012. The FTSE 250 index ended down 0.6% at 16,772.57 points, and the AIM All-Share closed down 1.0% at 717.91.
"Absent the occasional piece of [merger and acquisition] news that drives a stock price higher, it appears no long-term positions are being put on before the [US Federal Reserve] meeting. That just leaves stock indices subject to very volatile commodity prices," said Jasper Lawler, market analyst at CMC Markets.
The Fed will announce its policy decision on Wednesday at 1900 GMT and is widely expected to raise US interest rates for the first time in almost 10 years, since June 2006.
In Europe, the CAC 40 in Paris ended down 1.7% and the DAX 30 in Frankfurt closed down 1.9%.
Wall Street also was lower at the London close. The Dow 30 was down 0.5%, the S&P 500 down 0.7%, and the Nasdaq Composite down 0.9%.
The pound traded the dollar at USD1.5136 and the euro traded at USD1.1040.
Oil prices were again in the spotlight during the London session, falling to their lowest level since the end of 2008. Brent oil sank to a low of USD36.32 a barrel, while West Texas Intermediate touched USD34.51 a barrel. Oil prices were off their lows by the European equity close, with Brent at USD37.37 and WTI at USD35.66.
However, the damage was already down for London-listed oil companies with Royal Dutch Shell 'A' shares down 2.6%, BP also down 2.6% and Ophir Energy, in the FTSE 250, down 6.1%.
The oil price decline overshadowed Shell's confirmation that the Chinese Ministry of Commerce gave its unconditional clearance for Shells merger with BG Group, adding to the approvals the pair already received in Brazil, the European Union and Australia. The Chinese clearance is the final pre-conditional approval required for the deal.
BG Group ended down 0.8%.
However, the losses made by oil companies were dwarfed by miners, which dominated the fallers list in the FTSE 100. Glencore was the worst performer in the index, down 6.3%, Antofagasta was down 3.9%, while Anglo American was down 3.8%.
The FTSE 350 Mining sector index ended down 3.1% at 6,708.94, reaching its lowest level since July 2004 at 6,673.03 earlier in the day.
The price of gold at the London close was USD1,069.19 an ounce.
Elsewhere in the London market, insurer Old Mutual ended up 4.1%, the biggest FTSE 100 gainer, investment bank and wealth manager Investec up 3.2%, and packaging firm Mondi up 2.9%, all bouncing back from recent heavy falls after the South African rand rebounded against the dollar.
The shares of the three companies, each with big South African operations, had been sold over the previous two trading sessions as the rand hit record lows against the dollar following the dismissal of South African Finance Minister Nhlanhla Nene last Wednesday. Nene was replaced by little-known parliamentarian David Van Rooyen.
Shares in Old Mutual had lost 20% before Monday's gains, Investec 21% and Mondi 5.1%.
However, the rand rebound against the dollar Monday, trading at USD0.0654 at the London close after South African President Jacob Zuma appointed Pravin Gordhan, who had held the finance minister position prior to Nene, back to the role, replacing Van Rooyen, who held the job for only a week.
Education support-services company Tribal Group ended down 50% at 27.13 pence, by far the worst performer in the FTSE All-Share, having earlier reached an all-time low of 19.16p. The company said it plans to raise up to GBP30.0 million in a rights issue early next year in order to cut debt and provide working capital and said it will move to AIM to cut costs.
The group said it has suffered from "slow" sales momentum, while several "key customer contract milestones" have moved into 2016, meaning that adjusted operating profit for 2015 is likely to be "significantly lower" than expected.
Tribal has warned its lenders that it may breach the covenants of its revolving credit facility, under which the group is able to borrow up to GBP50.0 million. The group has also begun talks with its bankers to "negotiate amendments to the operation of covenants and the waiver of any event of default that may result from our current trading performance".
In the economic calendar Tuesday, UK retail, consumer and producer price indices are at 0930 GMT, just before ZEW economic sentiment surveys for Germany and the eurozone at 1000 GMT. The Bank of England's quarterly bulletin will be released at 1200 GMT. The New York State manufacturing index is at 1330 GMT, alongside US consumer price inflation at 1330 GMT.
As the UK corporate calendar winds down for the Christmas holidays, FTSE 250-listed oil services company Petrofac issues a trading statement, while chipmaker Imagination Technologies Group, carpet retailer Carpetright and investment trust F&C Global Smaller Companies all report half-year results.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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