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FTSE retreats after strong gains, led lower by miners and engine makers

Published 12/10/2015, 17:28
© Reuters. People walk through the lobby of the London Stock Exchange in London
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By Kit Rees and Atul Prakash

LONDON (Reuters) - The FTSE fell on Monday after posting its biggest weekly gain since 2011 in the previous session, weighed down by mining and aerospace stocks.

The UK mining index was down 2.7 percent, the biggest sectoral decliner, after surging 19 percent last week to record its best weekly performance in nearly seven years.

Mining and trading company Glencore (L:GLEN) fell 6.2 percent, with Antofagasta (L:ANTO) down 3.3 percent and Anglo American (L:AAL) down 4.8 percent.

Glencore's shares rose earlier in the session on its plans to sell copper mines in Australia and Chile with a view to reducing its debt burden, but analysts said that the move was unlikely to make a big difference.

Rolls-Royce (L:RR) shares fell 3.9 percent after engine makers confirmed that they were in the process of filling out questionnaires sent to them by the European Commission regarding equipment servicing contracts in the aviation industry, in what could be a first step towards launching an investigation.

Brewer SABMiller (L:SAB) was down 1.3 percent at 36.99 pounds after AB InBev, the world's largest brewer, raised its takeover offer to 43.50 per share, as some investors worried that the parties were too far apart to agree to a deal.

The benchmark FTSE 100 index was down 0.7 percent at 6,371.18 points at its close, its first daily loss in nine sessions, having risen for the previous eight days.

The index gained 4.7 percent last week, its biggest weekly percentage rise since late 2011.

"The FTSE 100 is seeing some profit-taking after a strong run last week. The recent gainers are witnessing some pullback, with miners leading the index lower," said Jawaid Afsar, senior trader at Securequity.

"The market is looking for a strong catalyst to maintain its upward march. Until then, we will continue to see choppy moves."

Standard Chartered (L:STAN) shares fell 3.1 percent, with traders saying that a rating cut by Investec to "hold" from "buy" was weighing on the stock.

"Despite 'catch-up' downgrades elsewhere, it appears that we continue to model a far worse outcome for the income statement than existing consensus assumptions," analysts at Investec wrote in a note, adding that they thought revenue and earnings forecasts remained too high.

© Reuters. People walk through the lobby of the London Stock Exchange in London

On the positive side, British Airways owner International Consolidated Airlines Group (L:ICAG) rose 1.3 percent after Goldman Sachs (N:GS) started its coverage on the stock with a "buy" rating.

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