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Mining stocks drag on FTSE 100 after Fed signals US strength

Mining stocks

Mining stocks fall on London’s top tier index

Mining stocks on London’s top tier index fell into the red, as precious metal prices dropped. Driven by hawkish signals from the Fed, precious metals were down on Thursday. The FTSE 100 ended the day down 0.1% or 8.05 points at 7,263.9, weighed down by the likes of Antofagasta down 21.5p to 922p, Randgold Resources 170p to 7,300, and Fresnillo down 32p to 1,410p.

It comes after the US central bank signalled that it was ready to start unwinding its quantitative easing programme. The news meant there was less reason for investors to turn to safe haven assets like gold.

David Madden, a market analyst at CMC Markets UK, said:

“Randgold Resources and Fresnillo are some of the biggest fallers on the London market as the underlying gold and silver markets are lower due to the Federal Reserve update last night.

“The US central bank was more hawkish than expected, and this prompted a drop in silver and gold – markets already in decline for nearly two weeks.”

Meanwhile, sterling regained its position as it climbed around 0.5% versus the US dollar to 1.355, and rose 0.1% against the euro to 1.135. The French Cac 40 and German Dax rose around 0.5% and 0.2%, respectively.

Mr Madden added:

“The GBP/USD is also making up for lost ground in the wake of last night’s US dollar surge. The prospect of a rate hike from the Fed at the end of this year dented the pound yesterday, but today we are seeing a rebound in sterling.”

Investors are now looking to the meeting of the major oil producing nations in Vienna. Representatives from the OPEC, Russia and other countries are set to meet on Friday to consider extending production cuts in a bid to quell the global oil glut.

In UK stocks, Capita tumbled 74.5p to 569.5p, making it the worst performing stock on the FTSE 250.

The outsourcing giant reported a 26% drop in pre-tax profits following a series of disposals, including its specialist recruitment arm, part of its Capita Europe business and its events operation.

Construction group, Kier had a robust performance from its property and residential arm and its shares topped the FTSE 250, rising 69p to 1,164p.

Meanwhile, news of CEO departures sent shares down for Drax and Compass Group.

Drax fell 6.4p to 308.9p after it was confirmed that CEO Dorothy Thompson has decided to leave the company and will be replaced by chief financial officer Will Gardiner from January.

Compass Group shares were down 41p to 1,571p after news of the departure of its CEO. Richard Cousins will leave on March 31 before retiring from the board by the end of the following September.

Mitchells & Butlers fell 10.8p to 236.4p after reporting that like-for-like drink sales fell 1.2% in the eight weeks to September 16 in a sharp reversal of the 3.8% surge seen in the previous 10 weeks.

The biggest fallers on the FTSE 100 were Kingfisher down 12.8p at 300.2p, J Sainsbury down 9.9p at 234.3p, EasyJet down 32p at 1,198p, and Compass Group down 41p at 1,571p.

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Paul

The author Paul