Britain's top share index fell on Friday, with miners leading the market lower after base and precious metals prices slipped due to a stronger dollar, which made metals costlier for holders of other currencies. The bluechip FTSE 100 index closed 0.3 percent lower at 6,775.77 points. The index, however, posted a small rise for the week, its second week in a row of gains.
Anglo American, Rio Tinto, Antofagasta, Fresnillo and Randgold Resources fell 2.9 to 6.9 percent, pushing the broader UK mining index to close 2.6 percent lower. A rise in the dollar put pressure on greenback-denominated commodities, which become more expensive as a result for holders of foreign currency. The dollar strengthened after Thursday's comments from US Fed chair Janet Yellen that the Fed could raise interest rates "relatively soon".
"Miners were a drag on the FTSE after their recent outperformance following the US election results," Jawaid Afsar, senior trader at Securequity, said. "Expectation are firmly set on a US rate hike next month, which is pushing the dollar higher. The dollar strength is likely to continue into the decision of the Fed next month, even though the currency is overbought at current levels."
Mid-cap gold miners also struggled, with Hochschild Mining and Centamin dropping 6.3 percent and 5.5 percent respectively. The FTSE 250 index, however, was 0.3 percent higher, supported by a 22 percent surge in Electrocomponents. Shares in the electronic component distributor hit a 14-year high after it raised its cost savings target and reported a 76 percent rise in first-half profit.
"Looking at the regions, the most improved area was Asia Pacific which saw its losses more than halve," Shore Capital analyst Robin Speakman said. "That said, the task emerging now is to drive the top line performance and sustain margins against longer term disintermediation pressures."
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