LONDON MARKETS: Mining, Retail Shares Tug FTSE 100 Slightly Into The Red

By Carla Mozee, MarketWatch Features Dow Jones Newswires

Pound back below $1.30

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Blue-chip stocks in the U.K. slipped Wednesday, with pressure on mining shares setting up to pull the market lower for a second straight session.

The U.K. FTSE 100 was down 0.1% at 7,481.04, led by the basic materials and industrials sectors.

Mining shares were dragged down after Moody's downgraded China's credit rating for the first time in nearly 30 years (http://www.marketwatch.com/story/moodys-downgrades-china-rating-for-the-first-time-in-nearly-30-years-2017-05-24), to A1 from Aa3. Moody's said it's concerned about the impact that rising levels of debt will have on the world's second-largest economy, which is a major buyer of industrial and precious metals.

Iron ore heavyweights Rio Tinto PLC (RIO) (RIO) (RIO) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) were down 2.2% and 1.3%, respectively. Copper miner Antofagasta PLC (ANTO.LN) gave up 1.3% and Fresnillo PLC (FRES.LN) moved down 1.4%.

Also, Randgold Resources PLC (RRS.LN) declined 1.5% and Anglo American PLC (AAL.LN) shed 0.7%.

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A "ratings downgrade has been long overdue," for China, wrote RBC Capital Markets, noting that the yuan dropped sharply against the dollar after news of the downgrade. "However, the fact that the rating wasn't cut by more given the deterioration in China's debt metrics in the past decade saw [China's offshore currency] quickly recoup losses."

Meanwhile, Glencore PLC (GLEN.LN) was down 1.1%. The miner said it "made an informal approach to Bunge (http://www.marketwatch.com/story/glencore-makes-takeover-approach-to-bunge-2017-05-24)...regarding a possible consensual business combination." A deal with grain maker Bunge Ltd. (BG) could make Glencore a major force in the U.S. agriculture market.

Retailers: Shares of department-store operator Marks & Spencer PLC (MKS.LN) flipped higher, rising 2.2%. They had been lower at the start of the session after the company said full-year profit fell to 117.1 million pounds ($152.2 million) from GBP406.9 million a year ago on weaker sales for clothing and non-food items.

The company's "[d]ividend was flat but net debt was better at GBP1.9 billion," said UBS in a note.

Shares of apparel and furnishings seller Next PLC (NXT.LN) were down 0.7%.

Kingfisher PLC shares (KGF.LN) were shoved down 6.1% after the parent of home improvement stores B&Q and Castorama said first-quarter comparable sales fell 0.6% (http://www.marketwatch.com/story/kingfisher-quarterly-same-store-sales-decline-2017-05-24) on weak sales in France and disruption caused by a company overhaul.

The pound bought $1.2973, compared with $1.2961 late Tuesday in New York, ahead of the release of minutes from the Federal Reserve's most recent meeting after European trading closes Wednesday.

Read:Fed minutes may quell doubt about a June interest-rate hike (http://www.marketwatch.com/story/fed-minutes-may-quell-fresh-doubts-about-a-june-rate-hike-2017-05-19)

Late in European trading hours Tuesday, the pound spiked up to $1.3034. That hurt the FTSE 100 which turned lower to close down 0.2%. A stronger sterling can hurt the FTSE 100 as about 75% of the revenues for the index's companies are generated overseas.

(END) Dow Jones Newswires

May 24, 2017 04:14 ET (08:14 GMT)