Market Report: Mining surge halted as funds switch to banks

The great surge in mining stocks ran out of steam as the big funds switched their attention to banks, detonating any prospect of the FTSE 100 ending the week on a high note.

Even so, no one expects the mining story will end here. Anglo American boss Cynthia Carroll believes the Chinese economy will grow 10 per cent this year and next, underpinning the attraction of commodity stocks such as her own.

But among the main losers on the day were Kazakhmys, down 76p at 1,423p, Xstrata, down 200p at 3,446p, Vedanta, down 107p at 1,911p, and Carroll's own group, Anglo, 146p weaker at 2,775p.

Banks boosted by the switch included HBOS, up 11p at 302p, and Royal Bank of Scotland, up 3.5p at 215.25p. But the fickle state of the market could just as easily see a switch again next week, according to some dealers. "The metals story isn't over yet," said one.

British Energy blew an early fuse, down 29p at 700p after the French power group EDF fled back across the Channel following the breakdown of £12bn bid talks. The modest size of the price fall, just 2. 8 per cent, suggests the market believes the two sides could still get together again, although broker Evolution believes the business is worth up to 920p.

Kingfisher was rewarded with a 5p rise to 124p, making it the best performing FTSE 100 stock after selling its 31-store Castorama DIY chain in Italy for £440m. The cash will help reduce its £1.6bn debt pile. Analysts believe Kingfisher boss Ian Cheshire got a good price for a business suffering from weak sales. Broker ING called it an "excellent price".

The FTSE 100 ended the session down 57.2 at 5,354.7 – just 2.1 points up on what has been a roller-coaster week. The FTSE Small Cap Index finished 22.5 points lower at 2,733.4. As London closed, the Dow Jones was 67 points off after figures showed US unemployment at its highest level in more than four years in July.

British Gas group Centrica – probably the most unpopular company in the country after its recent gas and electricity price rises – was also out of favour with JPMorgan as the broker cut its recommendation on worries over a possible political backlash this autumn. The shares fell 9p to 305p, making it the biggest faller of the day in the FTSE.

Trinity Mirror, the Daily Mirror publisher, was among the biggest risers of the day, up 14.25p at 100.5p after Merrill Lynch and Morgan Stanley thought the recent heavy falls in the price had been overdone and upgraded their recommendations. The first half of the year has been tough, with the advertising market showing little signs of improving but the group is imposing £40m of cost cuts this year and next.

British Airways gained 21p at one stage as dealers appeared to be taking a more positive view of prospects despite the 87 per cent fall in first-quarter profits. Broker UBS repeated its buy advice on the back of sliding oil prices but BA failed to hold the high ground and dipped to close just 3.5p up at 259p.

Debenhams edged up 2.2p to 43p as Milestone Resources, the investment group linked to Dubai-based retailer Landmark, nudged its stake up to 10.2 per cent, just below the 13 per cent held by Icelandic group Baugur, which is seen as a possible bidder for the struggling department store chain.

Shares in Irish pharmaceuticals firm Elan crashed after reports that two pat-ients suffered extreme side effects after taking Tysabri, a drug for treating multiple sclerosis. The drug was removed from sale three years ago but returned in 2006 with tougher prescription guidelines. In the latest setback, two European patients taking the drug contracted a serious brain infection. Earlier this week, the shares were hammered after mixed results from trials of its Alzheim-er's disease drug. Yesterday's 5p fall to 7p leaves the shares 75 per cent down on the week. Sleepy department store chain Beale advanced 5p to 33p after Andrew Perloff, a property entrepreneur with a record for shaking up tired boardrooms, launched a tender offer to buy 4.5 million shares at 36p to lift his current stake of 6.3 per cent to 28.2 per cent. Mr Perloff, who runs the quoted Panther Securities, is attracted by the underlying value of Beale's sites rather than its retail trading potential. Beale recently reported half-year profits slightly ahead at £881,000 on lower turnover of £27m. The company is valued at £6m.

Sellers took Autoclenz, the car valet company, to the cleaners, after it warned that difficult trading conditions would leave half yearly results lower than forecast following a 14 per cent dip in first-quarter sales. The firm said its bankers remain supportive but the shares still fell 12p to 27p. They have been as high as 101p.

It looks grim for Cains Beer Company, the Liverpool-based, AIM-listed brewer and pub operator, which suspended dealings after failing to reach a fund agreement with its bankers. It had warned that losses for the year would be great-er than expected and sound-ed hopeful of being thrown a financial lifeline from Bank of Scotland. The shares went into the deep freezer at 3p, having traded at 21.5p in the last year.