Commodity stocks take a battering

London’s blue-chip index sank yesterday after commodity stocks took a battering following a sharp drop in the price of oil.

The FTSE 100 Index closed down 51.1 points at 7472.71, with the mining giants bearing the brunt of the sell-off as Brent crude slid 2.5% to 45.74 US dollars a barrel.

Chilean copper miner Antofagasta was the biggest faller on the London market – falling more than 4% or 37p to 755.5p – after rising oil output in Libya and Nigeria left traders fearing Opec-led production cuts would have little impact on the global supply glut.

Glencore also took a hit, dropping 11.4p to 276.6p, while oil majors Royal Dutch Shell B and BP were off 49.5p to 2,125.5p and 12.4p to 460.3p respectively.

The oil price slump had shifted the top flight into a reverse following a morning rally triggered by dovish comments on UK interest rates by Bank of England Governor Mark Carney.

David Madden, market analyst at CMC Markets UK, said: “The FTSE 100 started out strong after the Bank of England Governor Mark Carney assured investors that interest rates will not be rising in the near term.

“The pledge to keep the cost of borrowing low was welcomed by equity traders, especially those outside the UK, as the drop in the pound made British stocks more attractive.

“The rally in stocks was short-lived as the overall sentiment turned negative, when the oil price declined severely.”

Sterling was down 0.9% versus the dollar at 1.261 and 0.7% against the euro at 1.134.

Across Europe, Germany’s Dax dropped 0.6% and the Cac 40 in France was 0.3% lower.

Sterling was down against the dollar and the euro.