London shares open lower as BP’s Alaskan shutdown, mining strike news weighs

LONDON (AFX) – Leading shares opened lower this morning, weighed down by weakness across miners and oils, with BP falling back after a shutdown at its Alaskan operation, dealers said.

By 8.15 am, the FTSE 100 index was down 62.7 points at 5,827.3, while the broader indices were also under pressure.

US stocks ended slightly lower on Friday night, with cautious investors dragging indices well below their opening highs, unwilling to trust that a benign monthly employment report was enough to keep the Fed from raising interest rates this week, traders said.

The Dow Jones Industrial Average closed down 2.24 at 11,240.35, a 104-point swing from its intraday high, while the Nasdaq fell 7.29 to 2,085.05.

Overnight in Asia, the Nikkei 225 index closed 345.12 points lower at 15,154.06, while the Hang Seng stood 20.65 points lower at 16,867.15 at midday.

Oil prices moved back above 76 usd per barrel in Asian trading, lifted by continued violence in the Middle East and strong gasoline demand in the US.

Prices were also boosted by news that BP Exploration Alaska has cut daily oil output from its North Slope production site in half, following the discovery of severe corrosion in a Prudhoe Bay oil transit line.

September crude was up 1.25 usd a barrel at 76.01 on Nymex.

In London, BP had fallen 10 pence to 626, while Royal Dutch Shell lost 12 pence to 1923 and BG eased 6-1/2 pence to 723-1/2.

Mining stocks also pulled back, with the sector ignoring firm commodity prices, as confirmation of a strike at the Escondida copper mine in Chile heightened concerns over rising costs in the industry.

Despite a near 2 pct rise in copper prices, Kazakhmys fell 28 pence to 1216, Vedanta dropped 28 pence to 1267, Rio Tinto lost 54 pence to 2752 and Antofagasta eased 2-1/2 pence to 421.

On the economic front, the Fed’s decision on interest rates will likely be the top economic story and market mover of the week, although Thursday’s trade deficit data and Friday’s retail sales for July should also be followed.

Back across the Atlantic, the Bank of England’s projections for growth and inflation, due on Wednesday, will likely take centre stage this week and investors will be hoping that the new figures will help settle market nerves.

The central bank’s first rate hike in two years last Thursday and decidedly hawkish accompanying statement spooked markets, and investors will be looking to the Monetary Policy Committee to clarify its thinking and justify why the hike was warranted.