NEW YORK: The U.K.’s benchmark stock dropped for a fifth straight session on Wednesday, even as mining and oil companies staged a rebound on the back of a well-received U.S. inventory report.
The U.K’s FTSE 100 UKX, -0.14% lost 0.1% to close at 6,126.68, after swinging between gains and losses throughout a choppy session. The blue-chips index on Tuesday dropped 1.4% to a three-week low as shares of metals and oil producers were hit hard.
But on Wednesday, those sectors recovered as oil and most metals prices moved firmly higher. Crude oil CLF6, +0.65% jumped 0.8% to $37.77 after a U.S. government report revealed that domestic crude supplies fell for the first time in 11 weeks. Oil prices have been struggling at nearly seven-year lows on oversupply concerns in the market.
Shares of major oil companies Royal Dutch Shell PLC RDSB, +1.67% RDS.B, +2.55% climbed 1.7%, BP PLC BP., +0.76% BP, +1.73% added 0.8% and BG Group PLC BG., +2.46% gained 2.5%.
In the mining sector, shares of Glencore PLC GLEN, +4.57% GLCNF, +3.34% 0805, -5.23% closed 4.6% higher, Rio Tinto PLC RIO, +3.88% RIO, +3.19% RIO, +2.41% gained 3.9% and BHP Billiton PLC BLT, +3.68% BHP, +2.05% BHP, +1.46% climbed 3.7%.
The slowdown in China’s economy has been a major source of concern among miners. China issued somewhat brighter economic news Wednesday: a rise in the consumer inflation rate in November. China’s consumer-price index rose 1.5% from a year earlier, beating a consensus estimate of a 1.4% gain in Wall Street Journal survey. The data suggested stimulus efforts by Beijing may be starting to take hold.
Bucking the positive trend in the sector, Anglo American PLC AAL, -1.22% dropped 1.2%. That moves comes after Tuesday’s 12.3% tumble that was triggered by Anglo’s decision to suspend dividend payments through 2016 and cutting capital spending by another $1 billion through next year. Anglo also plans to cut more than half of its workforce.
Jefferies on Wednesday cut its rating on Anglo American to underperform from hold. The company’s overhaul plans “are all steps in the right direction. However, the downside risk to commodity prices is still significant, and further action, including an equity issuance, may still be necessary in 2016,” analyst Christopher LaFemina in a research note. Jefferies also cut its price target on Anglo’s shares to £2.75 from £6.35.
