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FTSE 100 trims gains as Dow Jones, S&P 500 and NASDAQ decline on Greece debt woes

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Overview: the FTSE 100 turned negative late in the session before recovering to stand just above the opening level after European Union President Herman Van Rompuy announced that a deal to provide aid for debt laden Greece has been reached without providing any further details to leave investors guessing whether the measures outlined in the rescue plan would be sufficient to guide the country out of the debt crisis and whether other troubled euro zone member states including Spain and Portugal would seek EU aid as well.

Telecom group BT (LSE: BT.A) was the heaviest faller in the index, slipping 8% after announcing its Q3 results. Banks Lloyds (LSE: LLOY) and Barclays (LSE: BARC) followed with losses of 5% and 4%. Other notable fallers included commercial property companies Hammerson (SLE: HMSO) and Land Securities Group (LSE: LAND) and interdealer broker ICAP (LSE: IAP), which shed more than 3%. Airline British Airways (LSE: BAY) and temporary power provider Aggreko (LSE: AGK) also were in decline, dropping 2.5%.

Turbine manufacturer Rolls Royce (LSE: RR) led the blue chips with a 6% rally after reporting its final results for 2009. Medical devices manufacturer Smith & Nephew (LSE: SN), which also released its final results today, followed with a 5% gain.

The US stock market was off to a slow start with the main indices slipping into the red early. The Dow Jones Industrial Average and the broader S&P 500 index lost 0.1% and 0.2%, while the technology heavy NASDAQ composite declined 0.15%.

Commodities

Crude futures rose today as the unusually cold weather continued blasting the US with the northeast of the country experiencing record snowfalls, which boosted the demand for heating fuel, while Europe moved closer to resolving Greece's debt problem.

Oil prices slightly retreated yesterday after an update from the API (American Petroleum Institute) showed an unexpectedly high increase in crude inventories of 7.195 million barrels last week, while a Platts survey projected a 2 million barrel rise. Gasoline stocks were up 1.552 million barrels, while distillate stocks declined by 1.53 million barrels.

Refinery utilization rate also fell, moving down from 78% to 77% to signal lower demand.

April Brent Crude reached US$73.40/barrel in London, while US light, sweet crude climbed to US$75.41/barrel on the New York Mercantile Exchange.

The International Energy Agency (IEA) raised its global oil demand forecasts for 2010 by 120,000 bopd (barrels of oil per day) to 1.6 million bopd. However, oil cartel OPEC (Organization of Petroleum Exporting Countries) cut its own consumption projection to 800,000 bopd, while increasing the forecast for its supplies in 2010 by 150,000 bopd.

Politics has also factored in crude’s movements as OPEC’s second largest producer Iran is currently dealing with pressure from the international community after advancing its uranium enrichment programme. The US and the UK have already called for further sanctions against the state, contributing to the increase in crude prices.

The inventories data from the US Energy Information Administration (EIA), whose release was initially scheduled for today, will come out on Friday as the government’s offices were closed due to heavy snowfall.

Blue chip oil and gas stocks advanced today. Supermajors Shell (LSE: RDSB) and BP (LSE: BP) added 2% and 1% respectively. BG Group (LSE: BG) and Tullow Oil (LSE: TLW) also tacked on 2%, while Cairn Energy (LSE: CNE) took the lead with a 3% gain.

Engineering firms Petrofac (LSE: PFC) and Amec (LSE: AMEC) climbed 2.5% and 1.2% respectively.

All midcap producers followed the trend with the exception of Heritage Oil (SLE: HOIL), which slid 1.5%.

Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO) were the top performers in the sector in the FTSE 250 with gains of 3%. Soco International (LSE: SIA) moved up 2.2%, JKX Oil and Gas (LSE: JKX) and Salamander Energy (LSE: SMDR) added 1.5%, Premier Oil (LSE: PMO) tacked on 1.3% and Melrose Resources (LSE: MRS) added less than 1%.

Wood Group (LSE: WG) climbed 2.3%, while fellow services company Wellstream Holdings (LSE: WSM) rose marginally.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) rallied 12% to lead the small caps. North American based explorer Nighthawk Energy (AIM: HAWK) followed with a 3.5% gain.

Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Africa focused energy company Dominion Petroleum (AIM: DPL) headed in the opposite direction, shedding 4.5% and 4% respectively.

Gold, silver and platinum recover

Gold returned to yesterday’s levels after falling late on Wednesday on comments from Fed Chairman Ben Bernanke, who said that monetary policy would likely be tightened and cash pulled back from the economy before the currently ultra low interest rates are increased.

March futures for the US Dollar climbed to 80.08 on the ICE Exchange following Bernanke’s speech, sending gold, which moves inversely to the greenback, down to US$1,065/oz. Earlier in the day, the yellow metal climbed to US$1,080/oz after the euro strengthened against the US Dollar on reports that Germany was preparing an aid package for debt laden Greece.

Gold improved to US$1,079.5/oz shortly after the announcement that EU leaders agreed on a rescue plan for Greece.

Other precious metals followed as silver and platinum reached US$15.37/oz and US$1,516/oz respectively.

Mining stocks were on the rise today. Silver and gold miner Fresnillo (LSE: FRES) led the sector in the FTSE 100 with a 3.4% advance, Platinum producer Lonmin (LSE: LMI) and gold miner Randgold Resources (LSE: RRS) climbed 2.5% and 2%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) also added 2.5%.

In the FTSE 250, gold miner Petropavlovsk (LSE: POG) rose 4.2% for the lead, while Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) followed with gains of 1.5% and less than 1% respectively.

Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) led the juniors with a 17.5% rally. Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) also performed well with each tacking on 6.3%.

UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG), South American based explorer Mariana Resources (AIM: MARL) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS), which today updates the market on its progress at the Amantaytau Goldfields joint venture  in Uzbekistan, all climbed 4.5%.

Australian gold and copper prospector Solomon Gold (AIM: SOLG) and Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) were up 4%.

Miners surge as base metals climb

Copper and nickel also rose, reaching US$3.02/lb and US$8.10/lb, while zinc reached US$0.97/lb.

Mining stocks advanced with Antofagasta (LSE: ANTO) taking the lead with a 2.8% gain. Rio Tinto (LSE: RIO) and Vedanta Resources (LSE: VED) followed, climbing 2%, while BHP Billiton (LSE: BLT) and Xstrata (LSE: XTA) added 1.6% and 1.3%. Eurasian Natural Resources (LSE: ENRC) tacked on slightly more than 1%, while Anglo American (LSE: AAL) and Kazakhmys (LSE: KAZ) posted insignificant gains.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the market with a 6% rally.

Banks, insurance, private equity

Financial stocks were in selling mode today. Lloyds (LSE: LLOY) and Barclays (LSE: BARC) were at the bottom of the banking sector today with losses of 5% and 4% respectively. Royal Bank of Scotland (LSE: RBS) dropped 2.8%, while HSBC (LSE: HSBA) was down 1% and Standard Chartered (LSE: STAN) shed 1.8%.

Insurers Admiral Group (LSE: ADM) and Aviva (LSE: AV) gained nearly 1%, while their sector peers turned negative.

Standard Life (LSE: SL) was down 1.7%, while Legal & General (LSE: LGEN), Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) slid 1% and Old Mutual (LSE: OML) declined marginally.

Private equity group 3i (LSE: III) was down 3%.

 

 

Large and Mid Cap News

Xstrata (LSE: XTA) chief Mick Davis predicted that commodities markets would shrug off depressed demand and prices triggered by the financial and economic crisis in 2008 and 2009 and return to a situation where demand would outstrip supply.

Small Cap News

Live interactive TV gambling specialist NetPlay TV PLC (AIM: NPT) said it signed a new two year TV distribution deal with STV Group PLC (LSE: STVG) to broadcast ChallengeJackpot.com, one of its key branded TV shows, live on the late night schedule, six nights a week.   The agreement follows a successful trial during the final quarter of 2009.

China Food Company PLC (AIM: CFC), a manufacturer of cooking and dipping sauces, said it expects trading for 2009 to be moderately ahead of market expectations.

Oxus Gold (AIM: OXS) has updated investors on the progress being made at its 50% owned Amantaytau Goldfields joint venture (AGF) in Uzbekistan. The company refined and sold its 18.2 tonne stockpile of silver doré from its Nukrakon (formerly named Vysokovoltnoye) heap-leach operation. Oxus has been recouping overpaid taxes and duties with US$3.1 million recovered to date

Central China Goldfields (AIM: GGG) has signed an agreement with Auzex Resources (ASX: AZX) to option a joint venture for the development of the Bullabulling gold property in the Coolgardie Goldfield, Western Australia. CCG will invest A$1.5 million in Auzex through a placing at A$0.25 per share, providing for an exclusive option until 7 April 2010.

Ocean Equities issued a research note on Chromex Mining (AIM: CHX) after the company recommenced mining at its Stellite chrome mine on the Western Limb of the Bushveld Complex in South Africa, saying that Chinese industrial production will be the key catalyst for the company’s share price in the mid-term.

In a note on Prosperity Minerals Holdings (AIM: PMHL), London-based stockbroker Daniel Stewart said it now considers it very likely that the company’s planned £300m asset disposal to TCC International will be completed. The broker’s 256p target price offers approximately 71% upside and according to Daniel Stewart the company’s proposed share buyback powers will remove the risk of an overhang post-completion.

Edison Investment Research welcomed this week’s update from Mediterranean Oil & Gas (AIM: MOG), which said that the 2P (proven and probable) reserves in its Ombrina Mare field in Italy doubled to 40 mmboe (million barrels of oil equivalent), raising its core NAV (net asset value) from 84 pence to 150 pence with a RENAV (risk exploration net asset value) of 223 pence assuming a US$60/barrel long term oil price.

Rodinia Minerals (TSX-V: RM, OTCQX: RDNAF) expanded its potential investor base as the company's common shares began trading on the Pink OTC Market's OTCQX International. To support the listing, Hodgson Russ LLP, will serve as Rodinia's Principal American Liaison (PAL) on OTCQX regulatory matters, providing guidance on listing requirements.

In response to market demand, Atlantic Coal (AIM: ATC) has raised a further £100,000 through the placing of another20 million new shares at 0.7p each. This latest tranche of placing shares represents 1.3% of the company's enlarged share capital. Earlier this week, Atlantic completed the placing of 80 million new ordinary shares at a price of 0.5p per share, raising £400,000.

London Mining (AIM: LOND) has received final parliamentary approval in Sierra Leone in relation to the Marampa licence area and the company is now commencing full development of the iron ore project. The Marampa project is the first to be ratified through Sierra Leone’s new Mines and Minerals Act, established in December 2009. The approvals include a fiscal incentive package, a mining and logistics plan and environmental permitting.

Horizonte Minerals (AIM: HZM) provided an exploration update today, saying its alliance with AngloGold Ashanti (LSE: AGG, NYSE: AU) was progressing well as a regional programme in Brazil has commenced with targets generated and that resource definition drilling at the Lontra laterite nickel discovery in Brazil will commence in Q2 this year.

Advanced Computer Software (AIM: ASW) announced the acquisition of Redac Holdings Limited, owner of software group COA Solutions, from Alchemy Partners for £100 million, which it said was immediately earnings enhancing and highly cash generative with strong recurring revenues.

Cluff Gold (AIM: CLF) said the total annual production from the Kalsaka and Angovia mines amounted to 76,753 oz (ounces) in 2009, and it is expecting to achieve the 100,000 oz target this year as Q1 production has been strong.

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