Leading shares have drifted lower but mining shares have suffered a spate of profit taking, amid continuing worries about demand.
Investors were buoyed on Friday by the Chinese central bank’s surprise interest rate - which sent commodity companies soaring - and hints from the European Central Bank that it was prepared to take action to boost the flagging eurozone economy and counter deflation fears.
But there is a calmer mood in the markets at the start of the new week, with the FTSE 100 down 1.90 points at 6748.86. There has been some support from a better than expected German confidence survey.
BHP Billiton is down 26p at £16.36 as it reacted to falling metal prices by stepping up its cost cutting programme. It is reducing capital expenditure at its copper and coal operations, but also expects a $500m increase in productivity gains to $4bn a year, following the spin-off of its aluminium, non-core coal, manganese, nickel and silver assets into a separately listed company. Analysts at Liberum said:
Capital expenditure is being cut from $14.8bn to $14.2bn this financial year and cut from $15bn to $13bn in 2016, without impacting any projects (i.e. all gains in capital productivity). Further capex cuts are the logical response to lower price environment we find ourselves in and could get more brutal (i.e. projects cut) if the price environment gets more desparate next year.
Elsewhere Rio Tinto is down 37.5p at 3004.5p while Anglo American is down 17.5p to 1362.5p.
Friends Life has jumped 20.9p to 368.6p after last week’s agreed approach from Aviva, down 21.5p at 517.5p, announced after the market closed on Friday.
Petrofac has plunged 286p to 907p as the oil and gas services company said it expected net profit in 2015 to be around $500m, well below forecasts of $688m. It blamed lower oil prices, a change in the timing of contracts and a settlement relating to a Shetland project.
Heading higher is the London Stock Exchange, 49p better at £21.52 following positive notes from Morgan Stanley and Citigroup.
Banks are better, with Royal Bank of Scotland shaking off having to make an apology to the Treasury Select Committee over misleading comments about its global restructuring group. Its shares are up 4.5p at 382.2p amid talk of a possible bid for its Coutts International business from Italy’s Intesa SanPaolo.
Lloyds Banking Group is 0.8p better at 79.29p while Barclays is up 1.9p to 238.15p.
