FTSE 100 flat as lockdowns weigh on mining, retailer shares

By Shashank Nayar and Amal S

(Reuters) – Britain’s FTSE 100 was adrift on Wednesday, weighed down by mining shares as a surge in virus cases and movement curbs raised demand worries, while Fresnillo dropped after the precious metals miner predicted lower gold production.

The blue-chip FTSE 100 index was flat, with miners and construction stocks falling the most, while the mid-cap index gained 0.3%.

Mining heavy-weights Rio Tinto and BHP Group were the top drags in the index, while zinc prices fell to their lowest in more than two months as stockpiles climbed to a two-year high and demand in top consumer China weakened. [METL/]

“Concerns about how long the lockdowns are going to last and whether there will be deeper restrictions imposed as we go along and how much of an economic impact its going to have continues to wiegh on sentiment,” said David Madden, an analyst at CMC Markets.

British retailers slipped 0.2% after reporting the biggest annual drop in prices since May, adding to signs of pressure on the sector.

The mood further dampened as Britain’s death toll from the coronavirus pandemic passed 100,000 people while the government battled to speed up vaccination delivery and keep variants of the virus at bay.

The FTSE 100 has recorded consistent monthly gains since November on expectations of a vaccine-led recovery, but it has lost steam as extended lockdowns and worries of vaccine roll-outs hit business activity.

Tullow Oil dropped 0.7% even after the oil exploration company forecast its operating cash flow to reach $500 million in 2021, if the oil price stays above $50 a barrel.

Fresnillo Plc fell 4.8% after forecasting lower gold output for the current year than pandemic-hit 2020, mainly after a land slip at one of its mines in Mexico restricted operations.

(Reporting by Shashank Nayar in Bengaluru; Editing by Arun Koyyur and Sherry Jacob-Phillips)