LONDON MARKETS: FTSE 100 Wavers As Miners Lose Ground

By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks edged higher Wednesday, slightly recovering from its worst session in about five months, but the benchmark FTSE 100 still lagged a rally in the broader European equity market.

The FTSE 100 was up 0.1% at 6,709.95, with luxury goods maker Burberry Group PLC and Royal Mail PLC among the best performers as shares rose 2.1% and 3.2%, respectively.

But the blue-chip index's gain was limited by losses for mining shares following a slower-than-expected industrial-output growth in China (http://www.marketwatch.com/story/china-jan-feb-industrial-output-growth-slows-2015-03-11), a major commodities buyer. Precious metal producer Fresnillo PLC struggled at the bottom of the blue-chip benchmark, losing 1.3%. Copper Antofagasta PLC fell 0.9%, adding to Tuesday's 5.5% drop, and iron ore miner Glencore PLC declined 1.1%.

Mining and energy stocks led Tuesday's selloff that left the FTSE 100 down by 2.5%, its sharpest fall since mid-October.

The Stoxx Europe 600 on Tuesday also dropped, but rallied Wednesday (http://www.marketwatch.com/story/european-stocks-rally-as-weaker-euro-fuels-exporters-2015-03-11)as euro weakness bolstered exporters, and as European Central Bank President Mario Draghi touted what he says has been an effective start of the bank's quantitative easing program. The Stoxx 600 was up 0.9%, and Germany's DAX 30 (DAX) barreled toward a record high as it jumped 1.9%

The "FTSE 100 continues to massively underperform the DAX ... it hasn't got the QE behind it that the DAX has" and the lack of energy plays on the DAX cushions the index when oil prices are driven lower, in contrast with the FTSE 100, said Richard Perry, market analyst at Hantec Markets.

Perry said the FTSE 100 appears "on the brink of a possible correction ... with the first initial support around the 6,650 area."

It was just late last month that the FTSE 100 reached its best closing high, finally surpassing the previous closing high set in December 1999.

Meanwhile, the pound (GBPUSD) fell $1.4960 from $1.5070 late Tuesday. The pound slightly edged back after data showed U.K. manufacturing output in January fell 0.5%, falling short of expectations of a 0.2% increase. But much of the pressure has been the result of a rally in the dollar (DXY) against major rivals as the U.S. Federal Reserve appears set to begin raising interest rates this year.

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