LONDON MARKETS: Commodity Stocks Pull FTSE 100 Toward Fifth-straight Decline

By Carla Mozee, MarketWatch Features Dow Jones Newswires

U.K. overall employment falls in three-month period to September

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Stocks in the U.K. fell Wednesday, heading for a fifth-straight loss, as a slide in oil prices pulled energy producer shares lower. Elsewhere in commodities, a drop in metals prices knocked down prices for miners.

U.K. data on wages were slightly above expectations, but pay for Britons is still falling when adjusted for inflation. Meanwhile, stocks were tracking sharp losses in futures for U.S. stocks.

What markets are doing: The FTSE 100 index dropped 0.6% to 7,373.18. The basic materials and energy sectors fell by the most, but the telecom and utility groups moved higher. On Tuesday, the London benchmark fell less than 1 point (http://www.marketwatch.com/story/ftse-100-aims-to-break-losing-streak-as-tesco-vodafone-bounce-higher-2017-11-14), enough to log a fourth consecutive decline.

The pound traded at $1.3162, little changed from $1.3165 late Tuesday in New York. It had briefly risen above $1.3200 after U.K. jobs data were released. Against the euro, sterling bought EUR1.1112, down from EUR1.1158 in the prior session.

The yield on the 10-year gilt fell 3 basis points to 1.28% as prices rose.

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Commodities pressure: Prices for oil and most metals were under pressure, which in turn weighed on shares of energy producers and mining companies.

Oil and Brent futures slumped more 1% Wednesday, extending losses logged Tuesday after the American Petroleum Institute posted an unexpected rise in weekly U.S. inventories for both crude oil and gasoline (http://www.marketwatch.com/story/api-data-reportedly-shows-an-unexpected-jump-in-us-crude-supplies-2017-11-14). A weekly supply update is due later Wednesday from the Energy Information Administration.

Thomas Kee: To make money in oil, listen to prices more than news (http://www.marketwatch.com/story/to-make-money-in-oil-listen-to-prices-more-than-news-2017-11-14)

Copper prices gave up 0.7%, building on Tuesday"s fall. That move came after disappointing Chinese data on industrial output (http://www.marketwatch.com/story/china-industrial-output-slows-in-oct-as-expected-2017-11-13) and housing sales (http://www.marketwatch.com/story/china-housing-sales-slow-year-over-year-in-october-2017-11-13) prompted concerns about slowing growth the world's second-largest economy.

The oil and gas and basic materials sectors have a 24% weighting on the FTSE 100, according to FactSet data.

What's moving markets: U.K. and European stocks were tracking losses for futures for the Dow Jones Industrial Average (http://www.marketwatch.com/story/dow-futures-tumble-more-than-100-points-as-mood-for-risk-sours-2017-11-15) and the S&P 500 . U.S. stocks have been rattled by concerns about delays to tax reforms from Washington. Republican senators are strongly considering adding a repeal of Obamacare's individual insurance mandate (http://www.marketwatch.com/story/senate-republicans-strongly-consider-adding-obamacare-mandate-repeal-to-tax-bill-report-2017-11-14) to a new version of their tax bill, Politico reported.

Read:Here's what happens if Obamacare mandate is repealed, as Senate is considering (http://www.marketwatch.com/story/heres-what-happens-if-obamacare-mandate-is-repealed-as-senate-is-considering-2017-11-14)

Britain's Office for National Statistics released employment and wage figures on Wednesday. The overall employment number fell in the July-September period, the first decline since 2015. Average annual wage growth remained at 2.2%, meaning that Britons' wages fell by 0.5% when adjusted for inflation (http://www.marketwatch.com/story/uk-employment-drops-for-1st-time-in-2-years-2017-11-15).Inflation currently stands at 3% (http://www.marketwatch.com/story/uk-inflation-stays-at-5-year-high-of-3-2017-11-14), above the Bank of England's target of 2%.

What strategists are saying: "There has been a muted reaction from the pound ... off the back of a rather curious labor market report. Whilst wage growth figures beat expectations, the employment rate surprised by dipping slightly," said Hamish Muress, currency analyst at OFX, in a note.

"The Bank of England will be relieved to see the gap between wage growth and inflation narrow, but may now be asking whether the U.K. has reached its maximum employment rate. If this is the case, then wage growth could accelerate further in 2018," he wrote.

"In the U.S., the Senate GOP released its modified tax plan late on Tuesday, making some provisions temporary (though not corporate tax cuts) in an effort to comply with reconciliation rules," said Elsa Lignos, global head of FX strategy at RBC Capital Markets, in a note.

"Repealing the [Obamacare] individual mandate generates an estimated $340 billion in savings but could also lead to GOP defections as with Obamacare repeal," she said.

Stock movers: Shares of oil producers Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) and BP PLC (BP.LN) (BP.LN) shed 1.4% and 1.2%, respectively, as oil prices lost ground.

Among miners, Glencore PLC (GLEN.LN) shares were 3.6% lower, Rio Tinto PLC (RIO) (RIO) (RIO) gave up 2.2%, and Anglo American PLC (AAL.LN) erased 2.9%. But Fresnillo PLC (FRES.LN) managed to move up by 1.9% as gold prices modestly firmed.

Barratt Developments PLC (BDEV.LN) shares slipped 0.5% even as the home builder said total forward sales rose 8.4%, indicating a strong start to the new financial year (http://www.marketwatch.com/story/barratt-developments-sees-strong-start-to-new-year-2017-11-15).

(END) Dow Jones Newswires

November 15, 2017 06:33 ET (11:33 GMT)