After Friday's US jobs-fuelled rise, miners and banks are leading the London market lower today.
Banks have come under pressure on investors concerns about a windfall tax , while mining groups are suffering after a drop in commodity prices after the dollar strengthened. So the leading index is currently down 53.30 points at 5269.06.
Eurasian Natural Resources Corporation is the biggest faller, down 33.5p to 887.5p while Randgold Resources has lost 135p to £48.38 as gold fell 2% to $1,135.8 an ounce.
Rio Tinto lost 48p to £30.77 as it sealed a $116bn iron ore joint venture with rival BHP Billiton, down 14.5p at £18.76. Analysts at Cazenove said:
This announcement will put to bed recent speculation that Rio Tinto was looking to extricate itself from the initial deal and is likely to be taken positively, in our view, although it clearly reduces the probability of BHP Billiton revisiting a full bid. Our numbers already incorporate the joint venture so we are not making any adjustments today; nonetheless, it should highlight to the market the significant discount Rio Tinto is trading at relative to BHP Billiton on an ex-iron ore basis. Rio Tinto remains our top pick in the sector due to its attractive valuation, phenomenal cash flow generation and supportive balance sheet; we note, for example that the company could buy back $10bn of shares each year for the next three while remaining below 30% geared on our numbers; a resumption of the dividend, at least, seems virtually inevitable.
Among the banks, Royal Bank of Scotland fell 0.83p to 33.8p, Barclays is down 6.9p at 296.6p and Lloyds Banking Group is 0.93p lower at 55.07p.
