By Susan Mathew and Shristi Achar A
(Reuters) -London’s FTSE 100 closed lower on Thursday amid investor caution over higher U.S. interest rates, with mining stocks leading the falls as metal prices dropped due to a stronger dollar.
The blue-chip internationally-focused FTSE 100 index fell 0.6%, and the mid-cap index lost 0.8%, extending losses for a third straight session.
Rio Tinto dropped 4.5% as the mining group’s shares went ex-dividend. Falling iron ore and base metal prices weighed on the broader materials sector, which was down 3.3% at Thursday’s close. [MET/L]
Investors are now focused on U.S. non-farm payrolls data due on Friday, which could offer more clues on the Federal Reserve’s monetary policy path.
“It is basically uncertainty about the path for U.S. rates that has led to a decline in stocks,” said Giles Coghlan, chief market analyst at HYCM.
“All eyes are now going to be firmly on non-farm payroll print on Friday,” Coghlan added.
The pound gained 0.6%, further limiting gains on the exporter-heavy FTSE 100, which although up more than 6% so far this year, s off more than 2% from all-time highs hit last month as investors try to assess the impact of rising rates.
While forecasts show Britain’s economy could avoid a recession, entrenched inflation means traders are pricing in a more than 50% chance that Bank of England rates will reach 5% later this year, from 4% currently.
Among individual movers, BAE Systems rose 2.2% to a record high after reports that Australia could choose a British design for new submarines, lifting the aerospace and defence sector by 1.6% to record highs.
Shares of Aviva rose 2.7% after the group announced a 300 million pounds ($356 million) share buyback following a 35% jump in operating profit.
Domino’s Pizza Group slid 9% following a weak 2023 outlook due to higher interest costs and technology investments.
(Reporting by Susan Mathew and Shristi Achar A in Bengaluru; Editing by Sherry Jacob-Phillips, Sonia Cheema and Alexander Smith)
