A SELL-OFF in metals markets coupled with jitters ahead of Thursday’s elections in copper-rich Zambia left Vedanta Resources with the worst position in a retreating FTSE 100.

With oil prices falling beneath $60 a barrel, a six-month low, gold — which is commonly used as a hedge against inflation — also came under pressure. So too did non-precious metals, such as copper. Weak US housing data fuelled concerns over slowing economic growth in the US — a key factor in the switching by funds out of commodities and metals over the past few months.

Those conditions meant yesterday’s FTSE 100 losers were dominated by the natural resources sector, either in the form of oil majors — such as BP, off 10½p at 563½p — or miners, with BHP Billiton down 34p at 853p and Xstrata 77p cheaper at £20.36.

But it was India’s Vedanta that came off worst, with this week’s presidential poll in Lusaka giving short-term investors an additional reason to shun its shares. Incumbent Levy Mwanawasa, who is seeking a second and final term, faces a challenger in the Patriotic Front’s Michael Sata, who earlier this month was predicted by opinion polls to win 52 per cent of the vote, against Mwanawasa’s 27 per cent. Although yesterday’s final Zambian opinion poll put Mwanawasa unexpectedly back in the lead, natural resources investors have been unsettled by Mr Sata’s threats to raise taxes on foreign-owned mines, and limit the stakes foreign companies can hold in mining projects.

Vedanta owns 51 per cent of Konkola, Zambia’s largest copper producer, where it has recently invested $400 million (£210 million). Vedanta faded 81p to £11.12, with the FTSE 100 down 24.0 at 5,798.3.

A €4.4 billion (£2.95 billion) bid for Germany’s Schwarz Pharma from Belgium’s UCB — which two years ago bought Britain’s Celltech Group — served further to enthuse a biotechnology sector already excited by last week’s tie-up between Serono and Germany’s Merck. Shire Pharmaceuticals was again the most conspicuous beneficiary, gaining 14½p to 844½p.

Bid speculation continued to circle Hanson, up 7p to 687½p, and Scottish & Newcastle, 10½p dearer at 559½p. Smith & Nephew, the medical devices maker viewed as a target for its US sector rivals, also drew fast money, gaining 13½p to 478½p.

A weakening oil price helped ICI, up 2½p at 387½p, and Carnival, 49p ahead at £24.34, which also continued to benefit from earnings upgrades after last week’s third-quarter figures from the world’s largest cruise ship operator. Dresdner Kleinwort increased its 2007 earnings per share forecast by 2 per cent, and cited the scope for further fuel-related upgrades to estimates.

Smiths Group rose 2½p to 876p ahead of tomorrow’s full-year numbers, which will contain the first full-year contribution from its Medex acquisition. However, analysts remain wary after recent disappointments from Smiths’ aerospace division, which has been plagued by cost over-runs, and the exposure of its FlexTech cable assemblies business to a slowing US housing market.

• NEW YORK: shares were helped by gains in semiconductors and technology issues such as Apple Computer. The Dow Jones industrial average was up 21.90 at 11,530.0 by midday.

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