Dollar rallies after Federal Reserve hints at rise in interest rates
Sterling fell to a two-week low on Friday after comments from the US Federal Reserve sparked a dollar rally.
The pound fell 0.7% against the greenback to around 1.232, and dropped 0.4% versus the euro to 1.163.
The FTSE 100 closed lower by 0.28% or 18.94 points to 6775.77, as mining stocks suffered the effects of a stronger dollar, which tend to put pressure on commodity prices.
The US dollar index - which is measured against a basket of global currencies - hit its highest level since April 2003 on Friday.
It comes after Federal Reserve chair Janet Yellen told politicians at a Congress committee hearing on Thursday that the central bank was likely to hike interest rates "relatively soon."
Jasper Lawler, a market analyst at CMC Markets, said: "You'd think Fed chair Janet Yellen was fiercely hawkish in her testimony to lawmakers. In fact, Ms Yellen was characteristically cautious, citing further room to tighten in the labour market and refused to take any future fiscal stimulus as a given.
"Still, it's a near-certainty that the Federal Reserve will raise interest rates in December."
The currency's surge hit dollar-denominated commodities including gold which fell to fresh five-month lows, and iron ore, which saw its worst one-week loss since May.
It weighed down blue chip miners including Fresnillo, down 95p to 1,289p, Randgold Resources down 295p to 5,790p, Anglo American down 37p at 1,089.5p and Rio Tinto down 87p at 2,934p.
In oil markets, Brent crude was trading higher by 0.3% at 46.15 US dollars per barrel (£37.43) as investor renewed their faith in Opec which met with Russian's oil ministers in Doha.
There are hopes that producers will strike a deal that would freeze or cut production in a bid to support prices.
Across Europe, the French Cac and German Dax both closed lower, down 0.5% and 0.2%, respectively.
On the FTSE 100, BT shares fell 10.5p to 362.9p and Vodafone dropped 0.45p to 204.9p after mobile operator Three said it had been hacked by fraudsters who had accessed personal customer data.
The fraudsters are understood to have used the information to arrange for upgraded phones, believed to include iPhone and Samsung handsets, to be sent to customers before intercepting them.
Away from the blue chip index, Fuller, Smith and Turner shares rose 2.5p to 992.5p after half-year pre-tax profits rose 6% to £22.8 million.
The company said like-for-like sales at its managed pubs and hotels arm climbed 3.4% driven by a growing demand for food. It helped revenues climb 11% to £197.6 million.
The biggest risers on the FTSE 100 were TUI AG up 33p at 1,034p, Intercontinental Hotels Group up 79p to 3,250p, Micro Focus International up 48p to 2,063p, and Whitbread up 79p to 3,604p.
The biggest losers on the FTSE 100 were Fresnillo down 95p to 1,289p, Rolls-Royce Holdings down 41.5p at 657.5p, Randgold Resources down 295p at 5,790p, and Polymetal International down 26p at 762.5p.