Blue-chips hit by Glencore bid blow

COMMODITIES trader Glencore dragged the Footsie lower yesterday after officially confirming that it is not actively looking to buy Kazakh miner ENRC.

Under Takeover Panel rules, Glencore will now be unable to make a bid for the firm for the next six months. Glencore closed down 27p or 5.4 per cent at 473p, its lowest point since last month's 530p flotation, while ENRC fell 2.3 per cent or 17.5p to end the day at 744p.

The FTSE 100 index - which is heavily-weighted towards mining stocks - shed just over 1 per cent of its value to close down 60.58 points at 5,742.55.

A report showed US core inflation rose more than expected in May to post its largest increase in three years, bolstering the dollar. This in turn forced down commodities prices, which further affected miners on the Footsie.

The euro sank to below a near three-week low against the dollar at $1.42 following the rioting in Greece, with the pound up to €1.14 against the single currency but down to $1.63 against the strong dollar.

Will Hedden, sales trader at IG Index, said: "The ongoing Greek debt saga is weighing on market sentiment, as the ailing country teeters on the edge of bankruptcy. Eurozone ministers continue to debate the details of a multi-billion euro bailout package amid a backdrop of protests, police clashes and a general strike."

Bank shares were unsettled ahead of last night's Mansion House speech by Chancellor George Osborne. Royal Bank of Scotland ended 0.8p lower at 40.8p, HSBC was down 7.4p at 608.6p and Lloyds Banking Group eased back 0.9p at 47.7p.

Barclays fell by 7.1p to 257.4p, despite chief executive Bob Diamond unveiling plans to boost revenues by between 4.3 billion and 6.4bn by 2013. This would be achieved through growth in retail and business banking, with Africa a key target.

Diamond said a ring-fence around Barclays' retail bank would not be his first choice, but added it could be made to work.

Sainsbury's latest quarterly sales figures suggested it might be clawing back some ground on market leader Tesco, as it posted 1.9 per cent sales growth excluding fuel and the impact of new stores but including VAT in the 12 weeks to 11 June. Shares in the UK's third-largest supermarket chain fell back even so, by 3.2p to 323.6p.

Tesco, which reported similar sales growth on Tuesday, dropped 2.95p to 404.4p. Tom Gadsby, analyst at Matrix Group, said the figures suggest "Sainsbury is doing something right, which Tesco is doing wrong".

Another faller was credit checker Experian after a report that it could come under direct US supervision from the American government.

This sent its shares 15.5p lower to 785p.

Away from the blue-chip index, outsourcing company Mouchel tumbled 12 per cent, or 8.8p to 59.8p, as it warned it has been forced to negotiate new contracts with higher costs and lower margins following public spending cuts.The strong dollar also pushed down oil prices, with Brent down $1.36 a barrel to $118.80.

Falls in the oil price took their toll on energy stocks, with oil and gas services group Petrofac down 56p or 3.6 per cent at 1,515p and Edinburgh-based explorer Cairn Energy down 2.1 per cent or 9p at 410.9p.