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FTSE flat as miner gains offset

Source: Reuters - Thu 3rd Sep 2009

The top share index was flat early on Thursday as gains in miners, boosted by stronger metal prices, were offset by weakness in energy stocks and pharmaceuticals.

At 9:34 a.m., the FTSE 100 was down 2.14 points at 4,815.41, after closing down 2.15 points at 4,817.55, on Wednesday.

Miners took their cue from China, which was boosted by gains in commodity driven stocks.

Randging, Lonmin , Vedanang, Kazakhmys and Fresnillo climbed 3.1 to 5.4 percent.

But overall investors were cautious over prospects for the economy and the sustainability of a sharp rally since March.

"There are one or two factors are trying to drag the market better but the sentiment is we will go into the fourth quarter with investors still looking to move down the risk profile" said Stephen Pope, chief global strategist at Cantor Fitzgerald.


Oil majors fell with crude hovering around $69, well below August highs. 

Royal Dutch Shell, BP, Cairn Energy and Tullow lost between 0.1 and 0.6 percent.

Traders were also bearish on defensively viewed pharmaceutical stocks, highlighting the lack of market direction.

AstraZeneca and GlaxoSmithKline shed 0.5 and 0.8 percent respectively.

Banks were mixed, with HSBC and Barclays down 0.4 and 1.5 percent respectively.

But Lloyds Banking Group rose 0.4 percent, recovering slightly after it was the hardest hit in the sector on Wednesday after Britain's Guardian newspaper reported that Lloyds has won backing from its investors to raise 10 billion pounds to reduce its dependence on the taxpayer.

Activity in Britain's services sector grew at its fastest pace in nearly two years in August with the UK services PMI rising to 54.1, above the 53.9 forecast in a Reuters poll.

However, while sterling jumped to session highs, the FTSE showed little reaction.

The European Central Bank is to announce its decision on interest rates and comment on the outlook for the economy. The bank is expected to keep interest rates at 1.0 percent and ECB President Jean-Claude Trichet is likely to preach caution on the growing hype of a speedy euro zone economic rebound from recession.

Investor focus will shift to the US later in the session with initial jobless claim figures due at 1:30 p.m., as the number takes on more significance ahead of Friday's nonfarm payroll data. 

"Expect to see stagnant trading in late afternoon with investors eying up the nonfarm payrolls in the US tomorrow."

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