LONDON MARKETS: Rio Tinto Gets Knocked As CEO Leaves; FTSE Flat

By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- Shares of Rio Tinto PLC led the way lower in London after the departure of the company's top executive and a $14 billion charge, but the overall market stuck to the flat line as investors looked toward a big Thursday for earnings out of the U.S.

The FTSE 100 index was all but flat at 6,104.40, after closing at 6,103.98, down 0.2%, the prior day.

Mike McCudden, head of derivatives at stockbroker Interactive Investor, said the biggest test for markets this week remains Chinese economic data due Friday. Mining stocks, a heavyweight sector in London's market, are especially sensitive to economic signals out of China.

"We are however continuing to see profit taking from investors thanks to the recent rally but as yesterday's performance showed, with every wave of selling their emerges a new tranche of investors ready to buy in on the dips," he said in emailed comments.

Economic data out of the U.S., along with more big bank earnings, will provide another focus for London's investors on Thursday. U.S. stock market futures were showing mild losses, while Asia stocks mostly fell.

Shares of Rio Tinto (RIO) dropped more than 2%, pressured after Tom Albanese exited as chief executive on news that the Anglo-Australian mining group will book a $14 billion impairment charge for its aluminum assets and well coal assets in Mozambique.

Also in the mining sector, shares of BHP Billiton PLC (BHP) fell over 1%, while Xstrata PLC shed 2.5%. Shares of Glencore International PLC gave up 2.3%.

On the upside, shares of Associated British Foods PLC jumped 5.2%. The diversified food, ingredients and retail company reported revenue for the first 16 weeks was 10% ahead of last year, adding that it now expects to make more progress in full-year adjusted operating profit.

Also higher, U.K. banks gained across the board in the wake of some upbeat results in the U.S. on Wednesday. Notable gainers included Barclays PLC (BCS), shares of which rose 1%, and Royal Bank of Scotland Group PLC (RBS) , up 1.2%.

Deutsche Bank released a positive note on the sector Thursday, where analysts said they're turning more cautiously optimistic on the trend for provisions for payment protection insurance. Many U.K. banks have had to take provisions for the misselling of such insurance

"Though we would not be surprised to see 'top-ups' to provision levels in 4Q12 results, we think banks already hold significant capacity for future repayments at current claim rates, and that recent redress and search volumes suggest claims may be slowing," said the analysts in a note.

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