LONDON MARKET CLOSE: Commodities And Pharma Push FTSE 100 Below 6,000

LONDON (Alliance News) - Stocks in London ended down Tuesday, with commodities-related stocks and pharmaceutical shares dragging down the FTSE 100, which ended below the 6,000 line for the first time in nearly a month.

The blue-chip index closed down 2.8% at 5,935.84 points, with all its constituents in the red except for RSA Insurance, which ended up 0.6%, a day after its shares tumbled 21% because Zurich Insurance pulled out of talks to buy the company.

The mid-cap FTSE 250 index declined 2.2% to 16,529.98, while the AIM All-Share ended down 1.3% at 730.51. European major indices also finished lower, with the CAC 40 in Paris down 3.4% and the DAX 30 in Frankfurt off 3.8%.

Shares in China closed higher as the Hang Seng index ended up 0.2% and the Shanghai Composite up 0.9%, while the Japanese market remained closed for holiday until Thursday.

In the US, stocks were in the red at the London close. The Dow Jones Industrial Average was down 1.7%, the S&P 500 down 1.7% and the Nasdaq Composite down 2.1%.

The strength of the dollar since the US Federal Reserve on Thursday last week decided to keep US interest rates on hold is hurting the price of commodities such as gold, silver and oil. The yellow metal retreated Tuesday to USD1,125.72 an ounce, while silver was down at USD14.79 per ounce.

The pound was lower against the dollar Tuesday at the London close, standing at USD1.5366, having traded at USD1.5558 before the Fed decision last week.

As a result, London-listed mining and oil-related stocks took yet another hit on Tuesday, with miners' misery exacerbated by a series of downgrades in the sector by Credit Suisse.

Antofagasta, down 6.6%, was cut to Underperform from Neutral, while Anglo American, 6.1%, was downgraded to Neutral from Outperform. Mid-cap KAZ Minerals, down 25%, was cut to Neutral from Outperform.

Others such as BHP Billiton, down 4.2%, and Rio Tinto, down 3.5%, also ended among the biggest fallers. Glencore was the worst performer in the FTSE 100, down 9.6% at 107.53 pence, having touched a new all-time low of 99.59p, the first time its price has gone below 100.00p.

Oil also was under pressure Tuesday. At the London close, Brent oil prices were down at USD47.85 a barrel, coming off the level of USD50.31 prior to the Fed announcement, while West Texas Intermediate stood at USD45.62 a barrel, having traded at USD47.68 before the Fed decision.

Oil stocks finished lower, with BG Group down 3.0%, Royal Dutch Shell 'B' shares down 3.1% and BP down 2.5%.

Outside of the commodities sector, London-listed pharmaceutical companies were out of favour after US presidential candidate Hillary Clinton tweeted about "price gouging" in the specialty drug market.

On her official Twitter account Monday, Clinton cited a New York Times article which said the price of the Daraprim drug, which treats a life-threatening parasitic infection, soared to USD750 a tablet from USD13.50 a tablet overnight.

Clinton, the frontrunner for the Democratic nomination, tweeted "price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on". Clinton was scheduled to make the announcement in Des Moines, Iowa, at 2 pm local time Tuesday, which is 2000 BST.

Shire ended down 5.0%, AstraZeneca down 4.4% and GlaxoSmithKline down 3.1%. The FTSE 100 drug makers all have significant US sales.

Engineering company GKN also was amongst the biggest fallers, down 6.1%, amid worries about knock-on effects of the emissions cheating scandal engulfing German car maker Volkswagen, the largest customer of GKN's Driveline business.

Though UBS said that the impact on GKN is likely to be "trivial", shares in the engineer touched a low it hasn't seen since early 2013.

Meanwhile, Johnson Matthey, the platinum group metals company that makes emission control technologies, lost 8.0%

Supermarket chain J Sainsbury ended down 1.6% even though Kantar Worldpanel's grocery market survey said that it was the only big four UK supermarket to increase sales in the past 12 weeks, for the second consecutive period.

Sainsbury's sales rose 0.9% in the 12 weeks to September 13 to GBP4.01 billion from GBP3.97 billion in the same period a year earlier, as its market share stayed flat at 16.2%.

Sainsbury's blue-chip peers, whose sales Kantar said were lower, ended heavily in the red, with Tesco and Wm Morrison Supermarkets down 4.3% and 4.5%, respectively.

In the FTSE 250, IG Group Holdings led the mid-cap gainers, up 2.6% after it said its revenue increased substantially in the first quarter against a weak comparative, but said the volatile market conditions make it difficult to predict an outcome for the full year.

The spread betting and contracts-for-difference company, which gives retail traders access to financial markets, said it is trading in line with its expectations at present, with revenue in the first quarter to the end of August up 24% to GBP106.0 million, though it noted the same period last year was "particularly subdued".

Meanwhile, US-focused science and technology development and commercialisation company Allied Minds ended down 15%. Its shares dropped after New York-based hedge fund Kerrisdale Capital outlined the reasons for its short position in the London stock.

Kerrisdale said Allied Minds has "no objective evidence of commercial success" in its portfolio and said its review of the company's subsidiaries "indicates that they are developing products that are, at best, minor variations on existing alternatives, often in the face of significant competition and without plausible business models."

In the corporate calendar Wednesday, Smiths Group releases full-year results, United Utilities issues a trading statement, and Gresham House publishes half-year results. Meanwhile, Pan African Resources releases full-year results, while Highland Gold Mining and Styles&Wood Group publish half-year results.

In the economic calendar, China's Caixin manufacturing Purchasing Manager's Index is due at 0245 BST. Germany's manufacturing and services PMI are expected at 0830 BST, while the same for the eurozone are due at 0900 BST. European Central Bank President Mario Draghi speaks at the European Parliament in Brussels at 1400 BST.

In the US, Markit manufacturing PMI is due at 1445 BST, while Energy Information Administration crude oil stocks are at 1530 BST. Atlanta Federal Reserve President Dennis Lockhart speaks at 1730 BST before the Columbus Rotary Club in the state of Georgia.

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