BHP hits bottom of FTSE as iron price drops

Sliding iron ore prices took their toll on BHP Billiton and a handful of other miners and commodity-related stocks.

Shares in the Anglo-Australian mining group fell 2.6 per cent to £14.31 as iron ore sank below $50 a tonne to its lowest level since price assessments were first published by The Steel Index in 2008.

Recent stimulus efforts by China, the principal destination for Australian ore, have had little impact on iron prices.

Meanwhile, Societe Generale analysts suggested mining groups whose domestic currencies had weakened significantly against the US dollar were enjoying reduced production costs and therefore had little incentive to cut supply.

Weaker oil prices have also had a negative impact on BHP and its shares are down nearly a third since last summer when crude prices began to fall heavily.

Other diversified mining groups were in the lower half of the FTSE 100, with Anglo American down 1.9 per cent to 997p and Glencore, which does not produce but trades iron ore, lost 1.2 per cent to 280.8p.

In contrast, lower down the market, Ferrexpo climbed 2.4 per cent to 62.8p after the Ukraine-based producer of iron pellets for use in steel production reported a 2.5 per cent rise in first-half output.

"While the price environment remains weak and the conflict in Ukraine continues, we believe the company has de-risked its own situation where possible through its improving performance and lower-cost profile," said Asa Bridle at Cantor Fitzgerald, which reiterated a "buy" rating on the stock and a target price of 120p.

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Support was provided by retail stocks, which were lifted by signs of recovery in non-food sales at Marks and Spencer.

For the first time in 15 quarters, Britain's largest clothing retailer did not report a fall in like-for-like sales in its general merchandising division.

Sales of clothing, footware and household goods were up 0.7 per cent in stores open more than a year.

Shares in M&S rose 4.4 per cent to 554p and helped encourage investors into shares of rival non-food retailers.

Department store Debenhams gained 2.7 per cent to 77.2p while Dunelm Group, the specialist in soft furnishings and other homeware, added 1.9 per cent to 869.5p after reporting a 10.7 per cent rise in third-quarter total revenues.

There were some notable losses in the sector, however. JD Sports was among the biggest fallers on the mid-cap index, down 3 per cent to 470.5p, while Kingfisher stood close to the foot of the FTSE 100, down 1.4 per cent to 362.8p, after it said this week that it was to close 60 B&Q stores in the UK.

The mid-cap FTSE 250 index climbed 0.9 per cent to 17,268.83.

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