FTSE loses ground

Weak performance from the mining sector and fading hopes of a takeover tussle for supermarket giant Sainsbury weighed heavy on the London market today.

The FTSE 100 Index was off 4.4 points at 6428.9 by mid-session, despite a positive view in the City on retailers Next and B&Q owner Kingfisher.

Weaker mining stocks dragged the blue-chip stock index down, with Vedanta Resources off 26p at 1278p and Antofagasta down 6.5p at 482p.

Profit takers cashed in on profits made in the sector after the Chinese central bank raised its reserve requirement, a move taken to keep the country’s economic growth in check and which highlights fears over future demand for basic metals.

BHP Billiton was also down 4.5p at 1090.5p and Rio Tinto was off 29p at 2805p, although Kazakhmys managed to pick up on losses seen in the early session, with shares up 3p at 1106p by lunchtime.

The Footsie’s performance was also hit as the prospect of a private equity bid battle for Sainsbury receded, with reports emerging earlier in the day that Cinven had dropped plans to form a rival team to bid for the group.

Sainsbury shares were off 3.5p at 505p, down 1%.

There was also a fall of 1.4% for Reed Elsevier as some of the froth came out of the shares after yesterday’s pledge to sell the publishing company’s educational arm and give cash back to shareholders. The stock was 9p lower at 635.5p.

One of the biggest moves of the session came from clothes retailer Next, up 33p to 2089p after Goldman Sachs upped its rating to buy and said it expected an improvement in like-for-like sales.

But Kingfisher was leading the risers’ board at lunchtime after a positive note from HSBC. Shares were up 7.25p, or 3%, at 258.25p.

The pair were joined on the Footsie risers board by Royal Bank of Scotland ahead of its results on March 1, when the bank is set to report healthy earnings, with analysts expecting the group to bring in pre-tax profits of £9.16bn (€13.5bn) for 2006.

Compass shares were also up after the catering group said it was trading “marginally ahead of expectations”. Shares were 1.5p higher at 310.75p.

Bid speculation also helped NHS software company iSoft begin its recovery after fears earlier in the week that talks had failed between potential buyer, US drugs distribution firm McKeeson, and Computer Science Corporation, which subcontracts work to iSoft.

Shares were up 11%, or 4.75p, to 49.75p today after it emerged Australian software firm IBA Health was considering making an offer for iSoft.