Miners dig in as US debt fears weigh heavily

WEAKNESS in the dollar caused by fears over the American debt crisis gave metal prices a boost yesterday, which in turn helped miners to drag the Footsie into positive territory.

London's top share index had see-sawed over the course of the day but closed up 4.47 points at 5,929.73, aided by mining stocks Eurasia and Anglo American finishing near the top of the risers' board.

Eurasia closed up 1.3 per cent or 10.5p at 791.5p, while Anglo American was 35p or 1.2 per cent higher at 3,061.5p.

Concern about the United States debt crisis unsettled Wall Street and helped the pound improve to $1.64 against the dollar. Sterling also rose to €1.31 against the euro.

The Dow Jones industrial average was 0.5 per cent lower in early trading as American politicians remained in a bitter stalemate over raising the country's borrowing limit.

Ben Critchley, IG Index sales trader, said: "It's hard to see anything more significant right now than US lawmakers ensuring they don't navigate the global economy into a very dark pit."

Oil giant BP posted one of the biggest falls of the day after the company reported lower-than-expected quarterly profits and a plunge in production. Shares fell more than 2 per cent, or 12.2p, to close at 463.3p.

The market was unshaken by UK economic growth figures, which revealed GDP grew at 0.2 per cent in the second quarter. It marked a slowdown from the previous quarter, but was in line with expectations.

However, European Union debt concerns continued to trouble investors after disappointing Italian and Spanish bond auctions followed Monday's debt downgrade for Greece by ratings agency Moody's.

Banks continued to come under pressure as a result. Barclays dropped 0.2p to 228.8p and Royal Bank of Scotland was down 0.1p at 36.2p, though Lloyds Banking Group rose 0.1p at 45.2p

Despite the pressure on BP, shares in BG Group shot up 4 per cent, or 61.5p, to 1,486.5p after it outshone its exploration rival with second-quarter figures above market hopes.

Tour operator Holidaybreak jumped a further 12 per cent, or 44.5p, to 411.5p as it revealed upmarket rival Cox & Kings had tabled a potential takeover offer for the firm.

The Mumbai-listed firm, which dates back to 1758, is in talks with Holidaybreak's board after proposing 432.1p a share for the Cheshire-based company, valuing the business at just over 300 million.

Elsewhere, Cranswick, a major supplier of pork to UK supermarkets, saw shares tumble 15 per cent after it warned its full-year profits would be lower than expected as it battles with soaring pig-feed prices.

Cranswick, which supplies pig products for the Jamie Oliver brand as well as Sainsbury's and Tesco, said it no longer expected to hit its full-year pre-tax profit estimate, but did not offer a specific figure. Shares dropped 110.5p to close at 629p.Among the Scottish stocks, Weir Group continued its run of good form ahead of next week's interim results, with the Glasgow-based engineering firm climbing 8p to close at 2,218p following an up-beat analysts' note from Galvan Research.