FTSE: Metal firms present a miner problem

LONDON FTSE 100 CLOSE 5,761.66 -15.99

HEAVYWEIGHT miners dragged the FTSE 100 index lower yesterday despite another bright session for many top-flight retailers.

After bid speculation surrounding Argos owner Home Retail Group on Monday, an Easter-inspired lift to sales during March cheered investors again as the British Retail Consortium said the sector enjoyed its best month in nearly four years.

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But metal prices were blunted by a stronger dollar and economic uncertainty, hitting commodity shares and leaving the Footsie closing almost 16 points down at 5,761.66 amid low volumes.

Even news that the UK's trade deficit narrowed to 6.2 billion in February – its smallest since June 2006, after exports rebounded strongly from weather-related weakness in January – wasn't enough to lift the Footsie.

The pound was trading at $1.53 against the dollar after approaching $1.55 on Monday, while sterling hovered at around 1.13.

The single currency had a better day after strong support for a bond issue by debt-laden Greece.

But US markets failed to give much of a fillip, with the Dow Jones Industrial Average sliding below 11,000 in early trading after results from aluminium miner Alcoa disappointed analysts.

Mic Mills, senior trader at ETX Capital, said: "With US earnings now the main focus, and Wall Street retreating, investors are happier to switch from risk and sell down the heavyweight miners, oils and banks."

Mining shares dominated the fallers board in London, accounting for the five biggest blue-chip casualties. Kazakhmys was the hardest hit, with a fall of 50p, or 3 per cent, to 1,527p.

However, progress in the retail sector came a day after investors speculated on an Asda bid for Home Retail Group. Home Retail was up by a further 0.7p to 294.9p, after climbing 5 per cent on Monday, while rival Kingfisher – which owns B&Q – also benefited with a gain of 6.3p to 238.8p.

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Among other top flight retailers on the front foot, Next lifted 20p to 2,323p and Marks & Spencer cheered 4.1p to 379.9p.

The only negative note from the sector came from Debenhams, which received a lacklustre response to its half-year figures. The company reported an 18.6 per cent rise in profits to 123.6 million but shares fell 2.3p to 76.1p due to its failure to improve like-for-like sales in recent trading.

Elsewhere in the FTSE 250, Punch Taverns was up more than 7 per cent or 6.1p to 92p after Panmure Gordon issued a "Buy" rating and said it expected the company to report a stabilisation in its leased pubs at interim results next week. Enterprise Inns benefited from the Panmure note as its shares lifted 1.6p to 130.6p.

Other major second-tier risers came from the retail sector, with DSG International – which owns Currys – up 1.1p to 35.6p, HMV Group 2.4p stronger at 88.9p, Mothercare 11.5p higher at 593.5p and catalogue business N Brown up 9.3p at 241p.

There was also a rise of 4 per cent for gambling firm 888 Holdings after Dragonfish, its business-to-business division, extended a key bingo contract with Foxy Bingo owner Cashcade for a further two years until May 2014. Shares were up 3p at 104.5p.

Shares in Omega Diagnostics closed up 2p at 25p after the Alva-based medical testing kit maker said 2010 profits would be at the higher end of City forecasts.