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FTSE falls despite bank stock rally

Wednesday, July 30 16:39:23

Britain's top equity index fell in late trading today as weaker mining stocks, dragged down by Antofagasta, outweighed a rally in banking stocks spurred by Barclays.

The UK mining index fell 1.4 percent to sit at the bottom of the sectoral decliners' list. Antofagasta was down 4 percent, the main faller on the blue-chip FTSE 100 index.

The Chilean miner, which like others in the copper sector is battling declining ore grades, rising costs and weak metal prices, posted a 4.4 percent output drop in the first half of 2014 from a year earlier.

Chris Beauchamp, market analyst at IG, said that investors fretted about the rationale for increasing the miner's copper output at a time when the broader market was expected to record surpluses.

"Couple that with rising labour costs and it looks like a grim future for Antofagasta shares," he said.

The broader FTSE 100 index fell 0.4 percent to 6,780.02 points by 1436 GMT. However, losses were limited by a 1.2 percent gain on the UK banking index.

Banks were led higher by Barclays, up 4.2 percent after it reported progress in cutting costs and hiving off assets. However, its underlying profits fell 8 percent in the second quarter as subdued market activity and its attempts to crack down on high-risk trading hit investment banking.

The bank added the most points to the blue-chip FTSE 100 index after some analysts said the drop in investment banking revenue was less severe than they predicted.

"There was a lot of caution ahead of Barclays' results, but it was no worse than many analysts were expecting. Lower operating costs are generally positive for banks in the current environment," Hargreaves Lansdown analyst Keith Bowman said.

Earnings news also helped Travis Perkins, up 3.2 percent, after Britain's No. 1 supplier of building materials posted a 19.4 percent rise in first-half profit, helped by improving market conditions and increased customer confidence.

Among other movers, British American Tobacco fell 1 percent, with the strong British pound and a slight decline in volume hitting its revenue and profit.

The broader market has come under pressure as the crisis in eastern Ukraine has threatened to boil over, most recently after Russian-backed rebels were blamed for the downing of a Malaysian passenger jet over Ukraine two weeks ago. (Reuters)

For more visit: www.businessworld.ie