By Carla Mozee, MarketWatch
Tesco upgraded to outperform
LONDON (MarketWatch) -- U.K. stocks dropped sharply Wednesday,
led by a slide in mining stocks as copper prices tumbled and the
World Bank downgraded its forecast for global growth.
The FTSE 100 fell 1.9% to 6,421.45, hurt even more than other
major European benchmarks because of its heavy weighting of
commodity-related shares.
Mining stocks logged the worst performances in London trade as
copper prices fell to levels not seen since mid-2009 on concerns
about a supply glut. Meanwhile, the World Bank on Tuesday said it
now expects the global economy to expand 3% in 2015, down from its
earlier forecast of 3.4%. Strengthening in the U.S. economy and the
fall in oil prices won't be enough to offset troubles in the
eurozone and emerging markets, the institution said.
In the mining group, shares of copper producer Antofagasta PLC
fell 8%, leading decliners on the FTSE 100, and copper miner
Fresnillo PLC dropped 4.9%. Glencore PLC fell 11%, Anglo American
PLC lost 10% and Rio Tinto PLC (RIO) declined 5.8%.
BHP Billiton PLC (BHP) shares gave up 7.7%. S&P Capital IQ
on Wednesday downgraded its rating on BHP to hold from buy. "We
expect weaker commodity prices to increasingly impact on group
profits as hedges expire and see currency headwinds from a stronger
[U.S. dollar]," Clive Roberts, S&P Capital IQ equity research
analyst, said in a Wednesday note.
BHP's next update is due on Jan. 21, with the release of its
December 2014 operational review.
For copper, both "the negative momentum and the technical
situation suggest that the price slide could continue for the time
being," said commodities analysts at Commerzbank in their daily
report. But when "prices bottom out, the countermovement could
therefore be pronounced."
A few of the FTSE 100's components did advance on Wednesday.
Tesco PLC rose 2.3% after a ratings upgrade to outperform from
neutral at Exane BNP Paribas. After being "mismanaged," Britain's
largest supermarket chain operator "now has a very credible new CEO
who is rapidly driving changes, motivating staff and improving
sales," analyst John Kershaw wrote.
AstraZeneca PLC (AZN) shares rose 0.5% after the drug maker said
a study of its blood-thinning Brilinta tablets showed they reduced
the risk of heart attack in patients who have had previous
attacks.
Burberry shares climbed 0.9% as the luxury-goods maker posted
better-than-expected same-store sales growth for the third
quarter.
Barratt Developments PLC edged up 0.2% after the home builder
said in its trading statement that its financial performance for
the full year is on track for significant improvement.
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