--> LONDON, Dec 8 (Reuters) - Merrill Lynch has cut its rating on the global metals, mining and minerals sector to"neutral", the bank said on Friday.
"Sector downgrade is based on concerns about the impact of a slowing global economy in 2007 on metals consumption and our view this will impact stock performance in Q1/Q2. We remain confident of a strong 12-month view," Merrill said in a note.
"We view investor/hedge fund manipulation at the highest levels for some time (one investor has more than 50 percent LME aluminium inventory) and coupled with fears of a slower 2007, this will likely result in a substantial correction in metals prices from spot."
The bank cut its ratings on Antofagasta <ANTO.L>, Kazakhmys <KAZ.L>, KGHM <KGHM.WA> and MINARA <MRE.AX> to"sell" and cut ratings on BHP Billiton <BLT.L>, Rio Tinto <RIO.L> and Xstrata <XTA.L> to"neutral".
"We believe gold/silver, and steel plays present the most defensive exposure with the best diversified exposure recommended in CVRD <VALE5.SA> and Anglo American <AAL.L>."