Peter Ranscombe: Now miners are digging in for pain

THE Footsie was dragged lower by commodity stocks yesterday as results from blue-chip miner Eurasian Natural Resources fuelled fears over the recovery.

LONDON FTSE 100 CLOSE 5,302.87 -47.68

The Kazakh miner was the London market's worst performer with a 4 per cent fall after profits rose, but the group warned over lower metals prices later this year and higher costs.

In a sluggish summer session, the wider FTSE 100 index lost 47.7 points to 5302.9 as Wall Street's Dow Jones Industrial Average steadied the ship after early losses.

Joshua Raymond, market strategist at City Index, said: "For the best part of a month or so now equities have been simply trading through the motions.

"Until heavier trading volumes come back into the market, investors are happy to simply be range trading at this point."

Elsewhere in the mining sector, BHP Billiton shares were down 3.4 per cent after it launched a near $40 billion (25bn) hostile takeover bid for the world's biggest fertiliser producer - Canadian firm PotashCorp - following the rejection of an earlier proposal deemed "wholly inadequate" by the target. BHP lost 66p to close at 1,850p, while Eurasian was down 41.5p at 926.5p.

A bounce-back for the pound against the dollar to $1.56 also dented metal prices, while sterling hit €1.21 against the euro.

The pound was helped after minutes from this month's Bank of England's monetary policy committee meeting showed no members voted for further boosts to the money supply. Only one member voted in favour of a move away from 0.5 per cent interest rates.

Meanwhile a host of blue-chip heavyweights turned ex-dividend, meaning investors are not entitled to the latest payout and dragging down prices.

The ex-dividend stocks included HSBC, off 14.9p to 652.8p, Edinburgh-based Standard Life down 5.2p to 208.4p and British American Tobacco 48p cheaper at 2,232.5p. Property group Hammerson fell 5.7p to 363.7p and Financial Times publisher Pearson lost 15.5p to 976p.

The pressure on BP shares in recent days continued as fears over the cost of litigation relating to the Gulf of Mexico oil spill left shares 10.4p down at 397.6p.

But retailer Marks & Spencer made progress after drawing in more positive broker comment, as Arden Partners upgraded the stock from "reduce" to "neutral" Shares added 2.4p to 341.2p as Arden said it was impressed by recovery signs at the retailer's food business.

Elsewhere on the risers board, British Airways made more progress after workers at airports operator BAA cancelled a planned strike earlier this week, lifting shares 4.3p to 225.5p.

Perth-based transport group Stagecoach made healthy progress in the FTSE 250 Index after it reported a 7 per cent rise in like-for-like revenues at its South West Trains rail division. With its North American coach arm also showing signs of recovery, shares lifted 2.6p to 169.9p. Rival National Express added 2.3p to 224.7p.

Shares in insurer Legal & General were on the up - ending the day 2.5p higher at 95.75p - following rumours of a potential bid for the group by Zurich Financial. The market chatter follows Aviva's rejection of a bid from RSA for its general insurance business.