Heavyweight broker Citigroup (NYSE: C - news) took the shine off precious metals miners Fresnillo and Randgold Resources , with both companies tumbling to the bottom of the FTSE 100 after analysts at the bank sounded a note of caution about weakening gold and silver prices.
Gold, which has been on a bull run for 12 years, fell to a six-month low today, while silver was also weaker. The former is viewed as a safe haven by investors and the price of the metal has declined amid mounting optimism over the global economy.
Citi’s experts said they had been worried about gold and silver prices “for some time” and that “the recent further loss of momentum has concerned us even more”.
They decided to cut both Fresnillo and Randgold to “sell” from “neutral”, knocking shares in the former down 105p or 6.3pc to £15.50 and the latter down 220p to £55.80.
Although the blue chips have gained 1pc over the course of the week, the market started to show signs of tiring. After slipping 31.75 points on Thursday, the FTSE 100 closed up just 0.9 at 6,328.26 yesterday, with a surprise expansion in manufacturing in the New York region helping to keep the index in positive territory.
The mid-cap FTSE 250 rose 57.88 to 13,558.35, adding 1.4pc over the week.
Analysts at Citi were also moving shares in broadcaster ITV , 3.6 higher at 117p and the biggest riser on the main board. They argued a revival in European mergers and acquisitions was now on the cards and that “animal spirits” would start to return.
“The ongoing rally in the equity market is likely to feed into corporate confidence and M&A activity should follow, if history is a good guide,” the scribblers said.
They included ITV (LSE: ITV.L - news) on a lengthy list of European companies likely to become bid targets or start share buybacks because of their healthy balance sheets and cashflow. There has already been significant corporate activity in the media and telecoms sector: Liberty Global (NasdaqGS: LBTYA - news) is taking over Virgin Media (NasdaqGS: VMED - news) in a $23.3bn (£15bn) deal.
A “buy” note from Nomura, in which the broker lifted its price target to 130p from 125p, gave a lift to the broadcaster too, while one trader suggested that after six days of falls, ITV shares were due a bounce.
Among the small-cappers, Lombard Medical Technologies leapt 60½ 33.9pc to 239p after winning approval from US regulators for a device that treats abdominal aortic aneurysms.