Tuesday 2nd September 2008
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The FTSE 100 closed down 33.8 points at 5,602.8, starting the new month poorly after its relatively good showing in August, which was up 4.2 per cent.
Cairn Energy, Tullow Oil, BG Group, and Royal Dutch Shell all shed between 2.0 and 5.6 per cent.
US crude fell $US4.24 in electronic trading to $US111.22 a barrel by 3:05pm EDT as markets discounted the potential damage from the storm, which had earlier been forecast to hit the United States as a Category 4 storm.
London Brent crude settled down $US4.64 at $US109.41 a barrel.
Weaker metal prices - gold and copper both fell in London overnight - also hit mining stocks. The slide in metals prices reflected in part a rise in the US dollar.
The US dollar rose on Monday to its highest this year against a basket of major currencies, boosted by a sharp fall in oil prices, while sterling extended its recent slide and fell to new record lows against the euro.
The rise in the dollar's broad value pushed the euro under $US1.46 and sterling below $US1.80 for the first time since April 2006. The pound's losses were exacerbated by
UK economic data and a bleak economic view from the UK finance minister.
The yen shrugged off the surprise resignation of Japanese Prime Minister Yasuo Fukuda and took its cue from weakness in global equity markets to notch up five-month highs against the euro and other major currencies.
In other European share trading, Commerzbank dropped the most in almost six years in Frankfurt trading after agreeing to buy Allianz SE's Dresdner Bank for 9.8 billion euros ($USUS14.4 billion) in the biggest financial-services takeover in Europe this year.
Later today, the Reserve Bank of Australia is expected to cut its key interest rate, the first time it has done so in seven year. Anticipation of the cut and prospect for more have rattled the Australian dollar in the last month.
RBA Governor Glenn Stevens will lower the overnight cash rate target by a quarter point to 7% today, according to 22 of 23 economists surveyed by Bloomberg News. The decision will be announced at 2:30pm in Sydney.
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