FTSE ends lower after 11-month highs as energy shares weigh

Reuters
A man walks past the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth

By Atul Prakash and Kit Rees

LONDON (Reuters) - Britain's top share index ended lower after hitting an 11-month high on Monday, with a fall in crude oil prices hurting energy stocks and weaker gold prices and negative company updates dragging down precious metals miners.

The internationally-exposed FTSE 100 index (.FTSE) finished 0.3 percent weaker at 6,710.13 points after setting an intra-day peak of 6,756.13, the highest level since August last year. It is up 15 percent since the post-Brexit slump, but is up only 11 percent in U.S. dollar terms following a sharp fall in sterling.

The UK Oil and Gas index fell 2.6 percent, the top sectoral decliner, after Oil prices fell to two-and-a-half month lows amid worries that a global glut of crude and refined products would weigh on markets for some time. [O/R]

"The FTSE is held back by oil majors taking a significant 25 points off the index as the cost of a barrel of oil continues to leak towards April lows on fears of market oversupply," Mike van Dulken, head of research at Accendo Markets, said.

"While heavyweights BP and Shell had been rallying strongly post-Brexit - major beneficiaries of a weaker sterling in a dollar-denominated commodity space – their strong rises appear to have run their course."

Royal Dutch Shell (RDSa.L), Tullow Oil (TLW.L), BP (BP.L) and Cairn Energy (CNE.L) fell 2.6 to 7.2 percent.

Precious metals miners came under selling pressure after gold prices fell on a firmer dollar and ahead of central bank meetings in the United States and Japan. [GOL/]

Fresnillo (FRES.L) fell 1.6 percent, while shares in Randgold Resources (RRS.L), which have more than doubled this year as investors sought safe-haven assets, was down 3.4 percent. Randgold also came under pressure, the top loser in the FTSE 100 index, after lowering its output forecast for its Tongon mine in the Ivory Coast.

Analysts at Morgan Stanley said Randgold Resources' downgrade to its production forecast was unsurprising.

Outside of the blue chips, bookmaker William Hill (WMH.L) surged 4.8 percent after confirming it had received a takeover bid from Rank (RNK.L) and 888 Holdings (888.L). The move helped the mid-cap FTSE 250 (.FTMC), up 0.6 percent, to outperform the FTSE 100 index.

"The merger is a sign of the times in betting markets where online companies are increasingly dominant," Jasper Lawler, analyst at CMC Markets, said. "The choice for William Hill stakeholders is between continuing to develop the company’s own online operations or turning over its own high street shops to the already well-established online presence of 888 and Rank."

Among other movers, private equity firm 3i Group (III.L) was the top riser on Monday, up 3.3 percent, after a target price upgrade from investment bank Barclays.

"3i is our sector Top Pick, due to its portfolio being defensive in nature with strong earnings growth, a healthy realization pipeline and low individual asset leverage," analysts at Barclays said in a note.

(Reporting by Kit Rees; Editing by Robin Pomeroy)