London midday: Miners tumble as Japan intervenes

31st Oct 2011 12:15

The miners dragged the Footsie over 1% lower by midday after Japan's intervention into the currency markets and Chinese demand worries spurred a fall in commodity prices. London's blue chip index remains firmly in the red at the 5,641 mark, down from Friday's close of 5,702.In economic news, the growth rate of the UK's money supply (M4), excluding intermediate 'other financial corporations' (OFCs), increased by £3.4bn in September, compared to an average monthly increase of £3.5bn in the previous six months. The three-month annualised growth rate was 4.9%, following a 3.8% pace the month before, according to the latest data out from the Bank of England. Consumer credit grew by a more-than-expected £0.6bn in September, between £100m and £200m faster than in the previous three months. The twelve month rate of change increased to 2.5% from 2.3%. Despite this, total lending only rose by the same average amount as in the past six months, by £1.0bn. The reason for that appears to have been the slow-down in lending secured on dwellings, which moderated to a £0.3bn pace, down from the six month average of £0.6bn. MINERS TUMBLE, BANKS NOT MUCH BETTERDollar-denominated commodities became more expensive on Monday as the greenback strengthened, after Japan intervened in foreign exchange markets to weaken the yen. The Japanese Finance Minister Jun Azumi indicated that intervention will continue until he is satisfied. Meanwhile, the China Iron & Steel Association announced today that iron ore prices could fall even further in the near future, as steel mills in China remain unwilling to buy, while stockpiles at major ports still remain high. "In my personal opinion, the price of imported iron ore will fall further, because the trends for the whole sector are unlikely to get better and steel mills don't dare to buy ore," said vice-chairman Zhang Changfu at a press conference.The news sparked a steep sell-off in the mining industry today, with Vedanta Resources, Xstrata, Kazakhyms, Lonmin, BHP Billiton and Rio Tinto among the worst performers.Barclays fell into the red, despite being the highest riser early on, after releasing its third quarter results. At first glance, Nomura was a fan of the results, but after a conference call with the bank, the broker said that it now has a "less positive reaction". "After the recent rise in the shares and following numbers that were below estimates on an underlying basis, we think some consolidation may be in order," Nomura said. Nevertheless, the broker still said that it prefers Barclays to other domestic UK banks.Fellow lenders RBS and Lloyds were registering big falls, down 5.7% and 4.3%, respectively, while Barclays was down 1.1%.The banking sector, which was an average of 2.54% lower just after midday, seems to be correcting after a strong rise last week on the back of the EU summit agreements. Despite the fall today, the sector is still trading an average 3.6% higher than it was on Monday last week.HOMESERVE DROPS 29%, DEFENSIVES IN DEMANDOn the FTSE 250, emergency repair services firm Homeserve saw its shares plummet after the group announced that it is to suspend its telesales operation after an independent review. The audit firm Deloitte found "processes that did not meet the company's required standards." The firm responded by saying it has started "an immediate re-training programme for its telephone sales staff and is developing new scripts." Peel Hunt downgraded the stock from hold to sell following the announcement, while Investec put its buy rating under review.Meanwhile, defensive stocks such as pharmaceuticals, utilities and telecommunications companies were in demand as investors scaled back their risk. Among the top risers of the day were GlaxoSmithKline, Vodafone and SSE.BCFTSE 100 - RisersGlaxoSmithKline (GSK) 1,402.50p +1.34%Morrison (Wm) Supermarkets (MRW) 305.20p +1.29%Vodafone Group (VOD) 176.55p +1.29%BT Group (BT.A) 190.10p +1.17%SSE (SSE) 1,360.00p +1.12%United Utilities Group (UU.) 614.00p +1.07%National Grid (NG.) 627.50p +0.80%Severn Trent (SVT) 1,543.00p +0.59%Shire Plc (SHP) 1,971.00p +0.46%British Land Co (BLND) 517.00p +0.29%FTSE 100 - FallersVedanta Resources (VED) 1,317.00p -6.20%Royal Bank of Scotland Group (RBS) 24.80p -5.67%ICAP (IAP) 410.50p -5.11%Xstrata (XTA) 1,076.50p -4.94%Kazakhmys (KAZ) 973.00p -4.33%Lloyds Banking Group (LLOY) 33.64p -4.30%Lonmin (LMI) 1,120.00p -3.95%BHP Billiton (BLT) 2,019.00p -3.95%Rio Tinto (RIO) 3,478.00p -3.92%Aviva (AV.) 350.00p -3.58%