FTSE slips following festive break

Thu, 30th Dec 2010

The FTSE 100 index dropped by 0.2 per cent, a fall of just over 14 points by 11.41 GMT, creeping back under the 6000 mark to 5994. The banks suffered a poor morning of trading, but the miners strengthened despite the interest rate rise seen in China.

With the FTSE sitting only just below the 30 month record hit on Friday, the mining sector continued its strong run, with the upward trend seen over the past two years showing no signs of diminishing. With the price of gold rising again, Randgold Resources and African Barrick Gold added 2.9 and 3.5 per cent respectively as precious metal miners performed well in the morning's trading. Following a devastating trading year in 2008, when 56 per cent was wiped off the value of mining stocks, the sector has recovered well increasing by 108 per cent in 2009 and a further 29 per cent in 2010 so far. This puts it ahead of the average gain, with the FTSE 100 index adding 10.8 per cent in 2010 overall.The blue-chip index was weighed down by the banking sector yet again as the ongoing eurozone debt woes continued to prey heavily on investors as the year draws to a close. With the interest rate hike in China, further rises appear to be imminent in a move to attempt to control increasing inflation. Elsewhere in the market Smith and Nephew dropped 2 per cent as the US Food and Drug Administration failed to provide the necessary approval for a hip replacement.Despite the small downward slide, the index remains on track for the best December trading since 1987 when it rose 8.5 per cent. It is currently sitting at 8.4 per cent for the month to date with volumes very light over the festive trading period.
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