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FTSE 100 falls on CIPS PMI data, Dow Jones, S&P 500 and NASDAQ open lower

Published: 16:10 07 Apr 2010 BST

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The FTSE 100 turned negative today, posting a 0.2% loss after an update from the Chartered Institute of Purchasing and Supply (CIPS) showed a decline in PMI services index from 58.4 to 56.5 in March, reflecting lower levels of activity in the services sector.

Hedge fund manager Man Group (LSE: EMG) rallied 6% to take the lead among the blue chips. Retailer Kingfisher (LSE: KGF) and Imperial Tobacco Group (LSE: IMT) followed with gaines of 3.5% and 2.5% respectively. Other notable risers included Home Retail Group (LSE: HOME), clothing retailer Next (LSE: NXT), supermarket chain Sainsbury’s (LSE: SBRY) and pharmaceutical company GlaxoSmithKline (LSE: GSK), which all added more than 1.5%.

Oil and gas engineering firm Petrofac (LSE: PFC) and publisher Pearson (LSE: PSON) were at the bottom of the index with losses of nearly 4%. Oil and gas producer Cairn Energy (LSE: CNE) and commercial property company British Land (LSE: BLND) followed, shedding 3% and 2.5% respectively.

US stocks were lower in early trade. The Dow Jones Industrial Average was down 0.6%, the broader S&P 500 index slid 0.5% and the technology heavy NASDAQ composite declined 0.2%.

Commodities

Crude prices rallied at the beginning of the week, but were lower today ahead of a closely watched inventories report from US Energy Information Administration (EIA) after data from the American Petroleum Institute (API) showed another buildup in crude stockpiles on Tuesday, signalling weaker demand.

The API said that oil stockpiles added 1.1 mmbbls (million barrels), while gasoline inventories shed 2.9 mmbbls and distillates, which include heating oil and diesel, were down 1.5 mmbbls.

Meanwhile, EIA, which will release its inventories data later today, has cut last month’s global oil demand forecast by 10,000 barrels due to higher gasoline prices in the US and lower levels of demand in Europe.

Crude has been on the rise, making its way well above US$85/barrel amid a rally in global stock markets, which improved investor confidence in the strength of the ongoing recovery and boosted the outlook for oil demand.

May Brent Crude moved down to US$86.15/barrel, while US light, sweet crude retreated to US$86.56/barrel on the New York Mercantile Exchange (NYMEX).

Most blue chip oil and gas producers were in decline today. Shell (LSE: RDSB) was an exception, posting a small gain, while fellow supermajor BP (LSE: BP) shed less than 1%. Tullow Oil (LSE: TLW) lost nearly 1%, while BG Group (LSE: BG) and Cairn Energy (LSE: CNE) lost 1.7% and 1.1% respectively.

Amec (LSE: AMEC) was flat, while another oil and gas engineering firm Petrofac (LSE: PFC) lost 3%.

Midcaps followed the trend with the exception of Salamander Energy (LSE: SMDR), which rallied 5%.

Dana Petroleum (LSE: DNX) and JKX Oil & Gas (LSE: JKX) posted small losses, while Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) declined 2% and 2.3% respectively. Heritage Oil (LSE: HOIL) tumbled 9.5% after reporting delays in Uganda and saying that its well in Iraq would have to be drilled deeper.

Dragon Oil (LSE: DGO) and Premier Oil (LSE: PMO) were flat.

Wood Group (LSE: WG) lost 1%, while fellow services company Wellstream Holdings (LSE: WSM) managed to stay above the opening level.

Europa Oil & Gas (AIM: EOG) led the juniors, advancing 11.5% after releasing a management statement for the six months ending 31 January.

Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) also did well, advancing 6% and 4% respectively.

Gold surges on stronger physical demand

Gold was in demand today, touching US$1,140/oz after getting bolstered by increased physical buying. However, gains in the yellow metal were limited due to weakness in the euro on reports that Greece attempted to alter the financial aid deal reached by EU leaders at a recent summit to avoid the participation of the International Monetary Fund (IMF) in any bailout, should it be necessary. According to other reports, Greece has also cancelled plans to raise money from Asian investors, anticipating weak demand for its bonds.

Meanwhile, the IMF has sent a delegation to Greece to assist the government in managing the country’s finances.

Greece’s fiscal crisis and the debt woes of other euro zone states including Spain and Portugal have been weighing on Europe’s single currency for weeks, bolstering the US dollar to weaken gold, which is seen as an alternative investment to the American currency and normally moves inversely to the dollar.

The precious metal was boosted by high levels of demand from Indian jewellers ahead of the wedding season in that country, which is the world’s largest gold consumer.

Gold last traded at US$1,136/oz, while silver and platinum improved to US$17.97/oz and US$1,710/oz.

Major mining companies didn’t move by much. Gold producer Randgold Resources (LSE: RRS) and platinum miner Lonmin (LSE: LMI) were flat, while silver miner Fresnillo (LSE: FRES) was down 1%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) was unmoved.

Aquarius Platinum (LSE: AQP) was at the bottom of the pile with a 2% loss. Silver producer Hochschild Mining (LSE: HOC) and gold miner Petropavlovsk (LSE: POG) shed less than 1%.

Tajikistan operating gold miner Kryso Resources (AIM: KYS) was one of the top performing juniors, gaining 4.5%.

Turkey focused gold miner Ariana Resources (AIM: AAU) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) slipped 9% and 7.5% respectively.

Miners slide as copper and zinc stay unchanged

Base metals didn’t show much movement today. Copper and zinc were unchanged at US$3.59/lb and US$1.08/lb, while nickel inched higher to US$11.19/lb.

Major mining stocks were in decline today. Antofagasta (LSE: ANTO) was down 2% and BHP Billiton (LSE: BLT) slid 1.6%, while Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) shed slightly more than 1%. Eurasian Natural Resources (LSE: ENRC) lost 1%, while Anglo American (LSE: AAL) and Xstrata (LSE: XTA) posted small losses.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, retreating 3%.

Botswana operating nickel and copper miner Discovery Metals (AIM: DME) led the juniors, rallying 16% after upping the resource estimates for its Boseto copper project in Botswana. African Aura Mining (AIM: AAAM) also did well with a 5% gain.

Laterite nickel specialist European Nickel (AIM: ENK) and iron ore focused investor Red Rock Resources (AIM: RRR) moved in the opposite direction, slipping 8% and 7% respectively.
Banks, insurers, private equity

Banking stocks were mixed today. Lloyds (LSE: LLOY) and Standard Chartered (LSE: STAN) were flat, while HSBC (LSE: HSBA) added 1% and Royal Bank of Scotland (LSE: RBS) and Barclays (LSE: BARC) posted small losses.

Most insurance companies were in decline. Prudential (LSE: PRU) was at the bottom of the pile with a 2% loss. Admiral Group (LSE: ADM) dropped 1.4%. Aviva (LSE: AV), Legal & General (LSE: LGEN) and Old Mutual (LSE: OML) posted marginal decline.

RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) were flat.

Private equity group 3i (LSE: III) lost nearly 1%.

Small Cap Movers

Other notable movers among the small caps included novel pesticides and plant nutritional products developer Plant Impact (AIM: PIM), which added 5%.

Large and Mid Cap News

Dragon Oil PLC (LSE: DGO) told investors that it has re-assessed its proposed corporate restructuring, announced in March 2009. Following an extensive review the company has decided against its previous plans to incorporate a new holdings company in Bermuda, instead it will remain as an Irish incorporated holdings company.

Balfour Beatty (LSE: BBY) has been selected for pre-construction and construction services for Dallas Fort Worth (DFW) International Airport's seven-year Terminal Development Programme, through a joint venture known as BARC.

Small Cap News

Discovery Metals (ASX: DML, AIM: DME) has announced a significant upgrade of the Mineral Resource Estimate for the Plutus and Petra Prospects and the estimate of new Mineral Resources at South West Petra and North East Plutus at its Boseto Copper Project, following re-estimation by Snowden Mining Industry Consultants Pty Ltd.

Rambler Metals & Mining (TSX-V: RAB, AIM: RMM) is exercising its right to buy back 3% points of the total 4.5% Net Smelter Return (NSR) royalty held on the Ming property in Canada. Rambler said it will buy back New Meridian Mining Corp's (TSX-V: NWM.H) 2% NSR and Ming Minerals' 1% NSR for C$600,000 and C$500,000 respectively, before the production begins at the Ming Mine.

Landore Resources (AIM: LND) plans to raise approximately £1.2 million through the placing of 11.2 million shares at 11p each and has earmarked then proceeds for financing working capital and exploration expenditure.

Northern Petroleum (AIM: NOP) has appointed Nigel Wright to the board of directors as finance director to replace Chris Foss, who will now serve in the newly created role as Director of Legal & Corporate Affairs.

Shares in African  Eagle Resources (AIM:AFE) jumped nearly 10% this morning after the company announced that it would be divesting its 75% stake in the Igurubi Gold exploration project in Tanzania’s Lake Victoria Goldfields to Australian mining junior Peak  Resources (ASX:PEK).

In its full-year results statement, Aurelian Oil & Gas (AIM: AUL) said that the company has ‘very material’ opportunities in a stable and energy hungry part of the world. Aurelian noted that the year-ended 31 December 2009 was year of fundamental transformation with a €13.5 million fund raising, a significant board re-shuffle and a newly focused strategy, all devised during tough economic conditions.

Europa Oil & Gas (AIM: EOG) said it will be undertaking production enhancement work in April with a view to significantly increasing well productivity from its projects this year.

Exeter Resource Corp (AMEX: XRA, TSX: XRC, FSE: EXB) is distancing itself from bid rumours after a report from Reuters, citing a senior Exeter executive, suggested that the company is in talks with major gold mining groups and potential Chinese suitors interested in its flagship Caspiche copper-gold project in Chile. Subsequently, the company’s lawyer told Reuters that it is not in deal mode nor is it in active discussions.

International business processor Xchanging (AIM: XCH) has secured a five year procurement outsourcing contract from pallet and container pooling services provider CHEP and will now manage £75 million of spend per annum and a total £375 million over the duration of the deal.

In an update ahead of its H1 results, British pub-group Marston's (AIM: MARS) said it remains on track to meet its expectations for the financial year, and it continues to see an improvement in each of its trading divisions. Whilst Marston’s acknowledged that the trading environment remains challenging, it said it is encouraged by the performance in the first half year.

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