Banking and mining shares sink FTSE

A bad day for heavyweight mining and banking shares kept the London market in negative territory today.

Downgrades for Vedanta Resources and Halifax Bank of Scotland spread gloom through their respective sectors and led to rival firms dominating the FTSE 100 Index’s fallers board.

The performance offset better news from the high street in the shape of steady Argos sales, leaving the Footsie down 31 points at 6058.4 by lunchtime.

Trading was also affected by expectations of early losses on Wall Street as investors awaited tonight’s decision on US interest rates.

Miners topped the fallers’ board with Vedanta Resources the chief casualty after falling from favour with Merrill Lynch analysts, sending it 136p lower to 2214p.

Kazakhmys was next in line – off 87p at 1561p – after disappointing with first quarter production figures, while fellow Kazakh miner Eurasian Natural Resources fell 52p to 1195p.

Among banking stocks, Britain’s biggest mortgage lender HBOS slipped 17.25p to 469.5p after Citigroup cut its target price on the stock following the £4 billion right issue announced yesterday.

Royal Bank of Scotland and Barclays were fellow fallers, off 7.5p to 343.25p and 9.5p to 450.5p respectively, although HSBC bucked the trend after positive noises from Goldman Sachs sent it 8.5p higher to 879.5p.

Oil and gas explorer BG Group surrendered some of the gains seen on the back of results from Shell and BP despite £1.4 billion in first-quarter profits. Investors were wary after BG announced a £6 billion offer for Australian energy supplier Origin Energy, leaving shares 61p lower at 1247p.

Home Retail Group was the Footsie’s leading riser – gaining 8% or 19.5p to 262.25p – as traders digested a mixed update, with forecast-beating profits alongside weaker than expected trading at Homebase.

Marks & Spencer gained ground as investors digested a Competition Commission proposals to shake up its supermarket rivals. Shares were 8.5p ahead at 377p.

Satellite broadcaster BSkyB also powered up the risers’ board after meeting City expectations with net customer growth of 56,000 in the third quarter of its financial year. Shares rose 14.5p to 555p.

Insurer Admiral gained 36.5p to 857p after a broker upgrade following yesterday’s trading update, in which the group said it was on track for another record year.

In the FTSE 250, internet gambling site PartyGaming fell more than 9% or 2.25p to 24.25p after disappointing some analysts with first quarter poker revenues.