MONDAY MARKET CLOSE: Fresnillo plummets

Metals miner Fresnillo plunged more than 12 per cent on reports that Mexico is set to target its profits with a new tax.

Shares in the firm, which does all its digging in the Latin American country, dropped 153p to 1,045p, on what was otherwise a good day for markets that saw the Footsie hit its highest close for six weeks.

Mike van Dulken, head of research at Accendo Markets, said: “In an environment where commodities prices have fallen and costs risen, anything else that could squeeze margins is just more bad news.”

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With metals prices softening further, some miners that are not directly exposed to Mexico also saw big falls, as traders feared that other countries may follow suit if a tax is successful. Outside the top flight, Hochschild dropped 14 per cent to 237.4p and African Barrick Gold slipped 12 per cent at 143.9p.

But the wider FTSE 100 made gains as the more hawkish candidate dropped out of the race to replace Ben Bernanke as the head of the US Federal Reserve. With any remaining fears of military escalation in Syria dispersing over the weekend, the index closed 39.06 points or 0.6 per cent higher at 6,622.86.

Airline stocks EasyJet and IAG got a lift as oil prices fell and the threat of disruption diminished. EasyJet climbed 31p at 1,331p, while British Airways owner IAG soared 10.3p to 325p.

Financial stocks were among the beneficiaries as markets priced in a more dovish stance at the Fed. Standard Life was more than 3 per cent higher at 354.1p and Royal Bank of Scotland climbed 1.4 per cent at 366.5p. Lloyds Banking Group was up 1p at 77.36p, although confirmation that the UK government is starting to sell down its holding in the bank came after the market closed.