LONDON MARKETS: FTSE 100 Falls, Weighed By Losses For Bank, Mining Stocks

By Carla Mozee, MarketWatch

Antofagasta drops 7%

U.K. stocks declined Wednesday, with the benchmark FTSE 100's losses anchored by Lloyds Banking Group PLC and Antofagasta PLC after updates from the lender and the miner.

The FTSE 100 fell 0.6% to 6,976.41. That declines follows Tuesday's rise of 0.5%. (http://www.marketwatch.com/story/ftse-100-gains-as-miners-and-st-jamess-place-jump-2016-10-25)

Antofagasta PLC (ANTO.LN) sank to the bottom of index as shares tumbled 7.1%. The miner posted an increase in third-quarter copper output but also expects this year's copper output to be close to the lower end (http://www.marketwatch.com/story/antofagasta-copper-output-up-reaffirms-guidance-2016-10-26) of its forecast of 710,000-740,000 tons.

Shares of other miners were driven lower, with Anglo American PLC (AAL.LN) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) each down 1.8%. Rio Tinto PLC (RIO) (RIO) (RIO) was off 0.9%.

Copper producers "have not had a strong third quarter thus far with guidance downgraded by 166kt for 2016. Antofagasta will have to have a very strong quarter to hit the bottom end of 2016 guidance of 710kt and has downgraded its 2017 guidance early to 685-720kt (versus consensus at c.750kt)," said mining analysts at Liberum in a note.

"We still expect weakness in the copper price into the year end driven by dollar strength and weak apparent Chinese demand," they said, adding that risks to their bearish call include a continued rise in Chinese property prices.

Banks: Lloyds shares (LLOY.LN) (LLOY.LN) dropped 3.1% as the company's third-quarter profit tumbled 68% to GBP219 million (http://www.marketwatch.com/story/lloyds-profit-tumbles-on-provisions-2016-10-26) ($266.39 million) as it set put aside more cash to compensate customers who were sold an unnecessary insurance product. Lloyds did reaffirm its 2016 financial guidance.

Lloyds shares "as viewed as a proxy for the U.K. economy ... have been under pressure in anticipation of a hard Brexit, with all its negative connotations and with interest rates remaining at historic lows, the sector in general faces ongoing challenges," said Richard Hunter, head of research at Wilson King Investment Management, in a note.

A so-called hard Brexit refers to the possibility that the U.K. would lose access to the European Union's single market and that U.K. banks would have to give up passporting rules (http://www.marketwatch.com/story/banks-planning-to-abandon-uk-in-wake-of-brexit-trade-body-warns-2016-10-24) that allow them to seamlessly sell their services and products across the EU.

But positives for Lloyds include a "current dividend yield of over 4% [that] is attractive to investors given the wider savings backdrop," said Hunter.

Meanwhile, shares of Barclays PLC (BCS) (BCS) fell 0.7%, HSBC PLC (HSBA.LN) (HSBA.LN) lost 0.6% and Standard Chartered PLC (STAN.LN) gave up 0.9%.

Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) turned higher by 0.1%. Banking group CYBG PLC (CYBG.LN) said it's made a preliminary proposal related to RBS's Williams and Glyn operations. Off the main index, CYBG shares were down 1%.

The pound was buying $1.2212 compared with $1.2182 late Tuesday.

(END) Dow Jones Newswires

October 26, 2016 04:31 ET (08:31 GMT)

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