By Atul Prakash
LONDON (Reuters) - Britain's top equity index fell on Thursday as water utility Severn Trent slipped after its shares traded without rights to their latest dividend payouts, while precious metals miners tracked gold prices lower.
Shares in Fresnillo (L:FRES), Centamin (L:CEY) and Acacia Mining (L:ACAA) fell 1.2 to 3.7 percent after gold prices
The precious metal has been under pressure from a strong U.S. dollar and rising Treasury yields since President-elect Donald Trump disclosed policy plans that signalled faster inflation.
The blue-chip FTSE 100 index (FTSE) was down 0.6 percent by 1004 GMT. It closed slightly higher on Wednesday but finished the month around 2.5 percent lower. The benchmark index is still up nearly 8 percent so far in 2016.
Sunday's referendum on constitutional reforms in Italy also made investors cautious. Prime Minister Matteo Renzi has said he would resign if he loses the referendum, raising concern about political uncertainty.
"Sentiment is neutral, however, there might still be some position squaring to take place ahead of Sunday's Italian referendum," said Markus Huber, a trader at City of London Markets.
The index also came under pressure on Thursday after Severn Trent (L:SVT) fell nearly 3 percent as its stocks traded ex-dividend. Other FTSE 100 stocks going ex-divs were British Airways-owner IAG (L:ICAG) and Land Securities (L:LAND), down 1.2 percent and 1.8 percent respectively.
A rally in energy stocks limited the losses. Crude oil prices rose more than 10 percent in the previous session to trade around $50 a barrel on Thursday, holding onto most of the big gains made after OPEC and Russia agreed to restrict production.
The Organization of the Petroleum Exporting Countries agreed on Wednesday its first oil output reduction since 2008 after de facto leader Saudi Arabia accepted "a big hit" and dropped a demand that arch-rival Iran also slash output. [O/R]
The UK oil and gas index (FTNMX0530) hit a one-month high and was last quoted 2.4 percent higher, helped by a 1.8 to 2.5 percent rise in shares of BP (L:BP), Royal Dutch Shell (L:RDSa) and Tullow Oil (L:TLW).
However, some analysts expressed concern about the rally in oil prices would last.
"Filtering the knee-jerk reaction, we have doubts about the mid-term potential in the oil recovery," said Ipek Ozkardeskaya, senior analyst at London Capital Group.
"A supply-induced recovery will face two major issues. First, the oil recovery will certainly hit the barrier of a low global demand before it reaches the $55 level. Second, the higher prices will inevitable bring in new international players."