FTSE 100 gains as Dow Jones, S&P 500 and NASDAQ advance on Greece bailout speculation

Overview: the FTSE 100 turned early losses into gains, standing 40 points, or 0.8% above the opening level in late afternoon after mining stocks rallied after a recovery in metal prices, while the banking sector returned to positive ground as concerns over the debt situation in Greece eased amid speculation of a possible rescue package for the country from the European Union.

Xstrata (LSE: XTA) and Antofagasta (LSE: ANTO) led the blue chips with gains of nearly 6%, while fellow miners Rio Tinto (LSE: RIO), Kazakhmys (LSE: KAZ), Fresnillo (LSE: FRES) and Vedanta Resources (LSE: VED) followed, tacking on 4% and more. Retailer Kingfisher (LSE: KGF) also climbed 4%.

Investor Resolution (LSE: RSL) slid to the bottom of the index with a 2.5% loss. Beverage group SABMiller (LSE: SAB), Scottish & Southern Energy (LSE: SSE), insurer Aviva (LSE: AV) and business services company Serco Group (LSE: SRP) added more than 1.5%.

The US stock markets was off to a fast start as the Dow Jones Industrial Average rose 1% to recapture the 10,000 mark, the S&P 500 index advanced 0.7% and the technology heavy NASDAQ composite added 0.6%.

Commodities

Oil prices were slightly higher today after getting pushed down by demand concerns in Europe and the United States last week and on Monday with Brent Crude slipping below US$70/barrel to hit its four month lows.

European stock markets got hit by concerns over the debt situation in euro zone countries Greece, Portugal and Spain, which have also weakened Europe’s single currency to prop the US Dollar and make crude, which trades in the greenback, more expensive for holders of other currencies. Last week’s disappointing employment data that came out in the US also raised doubts about the strength of the ongoing economic recovery to further weigh commodities down.

No major economic updates are due out this week and oil prices are currently moving along with currency and stock markets. Investors will be looking for cues on Tuesday, when the API (American Petroleum Institute) releases its inventories report, which will be followed by data from the US Department of Energy on Wednesday.

March Brent Crude reached US$71.05/barrel, while US light, sweet crude traded at US$72.35/barrel on the New York Mercantile Exchange.

Oil and gas blue chips were mixed today. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) added less than 1%, as did Tullow Oil (LSE: TLW). Other FTSE 100 constituents BG Group (LSE: BG) and Cairn Energy (LSE: CNE) did better, climbing 1.3% and 1.6% respectively.

Amec (LSE: AMEC) posted a marginal loss, while fellow engineering company Petrofac (LSE: PFC) added 1.4%.

Midcaps also were mixed. Melrose Resources (LSE: MRS) and Heritage Oil (LSE: HOIL) led the pack, tacking on nearly 4%. JKX Oil and Gas (LSE: JKX) followed with a 3% gain, while Salamander Energy (LSE: SMDR) added less than 1% and Dragon Oil (LSE: DGO) was flat, as was Dana Petroleum (LSE: DNX).

Premier Oil (LSE: PMO) and Soco International (LSE: SIA) declined marginally.

FTSE 250 services companies headed in different directions as while Wood Group (LSE: WG) lost less than 1%, Wellstream Holdings (LSE: WSM) was able to post a small gain.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) led the small caps with a 16% rally after doubling 2P reserves at its Ombrina Mare oil and gas field. Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) followed with an 8% advance.

Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) was in decline, shedding 8%.

Gold, silver and platinum recover as US Dollar weakens

Gold spot prices steadied around US$1,075/oz today as the US Dollar gave way against the euro on talks of a possible bail out for Greece to resolve its mounting debt problem. Concerns over the debt situation in Greece as well as two other euro zone members Portugal and Spain has pushed Europe’s single currency down over the past couple of weeks to prop up the US Dollar and make the dollar denominated precious metals more expensive for holders of other currencies to curb the demand.

Gold moves inversely to the greenback as it is seen as an alternative investment to the American currency. Prior to last week’s disappointing US employment data, the yellow metal climbed back to US$1,100/oz following a rally in global stock markets, which increased the appeal of riskier assets such as gold.

Other precious metals also improved with silver and platinum reaching US$15.29/oz and US$1,492/oz.

All major mining stocks were on the rise with the sole exception of midcap silver producer Hochschild Mining (LSE: HOC), which posted a small loss.

Silver and gold miner Fresnillo (LSE: FRES) was the top performer in the sector in the FTSE 100 with a 4% gain. Platinum producer Lonmin (LSE: LMI) added 1.5%, while gold miner Randgold Resources (LSE: RRS) rose marginally.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) tacked on less than 1%.

FTSE 250 miners Aquarius Platinum (LSE: AQP) and Petropavlovsk (LSE: POG) advanced 3.5% and 2.5% respectively.

Commodity asset development company Mercator Gold (AIM: MCR) was one of the top performers in the markets with a 26% surge. Africa focused gold deposit developer Cluff Gold (AIM: CLF), Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and Western Australia operating Norseman Gold (AIM: NGL) all advanced 7% and Africa focused gold miner Pan African Resources (AIM: PAF) gained 4%.

Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) were in the red with losses of 6.5% and 6% respectively. Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) lost about 4%.

Copper and nickel climb to lift miners

Base metals also rose with copper and nickel reaching US$2.95/lb and US$7.89/lb, while zinc improved to US$0.93/lb.

Mining stocks were on the rise today. Xstrata (LSE: XTA) led the way, tacking on nearly 6%. Antofagasta (LSE: ANTO), Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) all added 5%, while Vedanta Resources (LSE: VED) rose 4% and Anglo American (LSE: AAL) and Eurasian Natural resources (LSE: ENRC) advanced 3%. BHP Billiton (LSE: BLT) gained 2.2%.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, climbing 2.3%.

South Africa operating chrome miner Chromex Mining (AIM: CHX), which has restarted operations at its Stellite chrome mine, led the juniors with a gain of 13.5%. Iron ore focused investor Red Rock Resources (AIM: RRR) followed, advancing 7%.

Mineral sands producer Kenmare Resources (LSE: KMR), Russia focused nickel and copper miner Amur Minerals (AIM: AMC) and Australia focused coking coal producer Caledon Resources (AIM: CDN) were in decline, shedding 5.5%, 4.5% and 4% respectively.

Banks, insurance, private equity

Banking stocks were in buying mode today. Lloyds (LSE: LLOY) was in the lead with a 3% gain, while Standard Chartered (LSE: STAN) added 1.7% and Barclays (LSE: BARC) and HSBC (LSE: HSBA) were up 1%. Royal Bank of Scotland (LSE: RBS) was flat.

Insurers were mixed. Admiral Group (LSE: ADM) climbed 1.7%, while Old Mutual (LSE: OML) and Prudential (LSE: PRU) added nearly 1% and Standard Life (LSE: SL) was flat.

Aviva (LSE: AV) headed in the opposite direction, sliding 1.5% as Legal & General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) followed with small losses.

Private equity group 3i (LSE: III) pulled back 1.2%.

Small Cap Movers

Other notable movers among the small caps included UK based electrical components producer and supplier Cinpart (AIM: CINP) with a gain of nearly 9% and home credit and motor finance specialist S & U PLC (LSE: SUS), which climbed 7%.

Large and Mid Cap News

AstraZeneca (LSE: AZN) said its CRESTOR treatment has been approved for a new indication by the US Food and Drug Administration (FDA), for use in reducing the risk of stroke, heart attack and arterial revascularization procedures in individuals without clinically evident coronary heart disease but with an increased risk of cardiovascular disease (CVD).

NYSE Euronext (NYSE: NYX) posted the third consecutive quarterly increase in net revenues and earnings per share in the final quarter of 2009, beating market expectations with revenues of US$640 million and earnings per share of 0.58 pence as operating expenses fell 16% year-on-year and 11% over the full year 2008.

Small Cap News

Mobile email and data synchronisation group Synchronica PLC (AIM: SYNC) said the MessagePhone low-cost mobile device aimed at emerging markets will be officially launched tomorrow, February 10, in London

In a year-end update ahead of its full year results, home credit and motor finance specialist S&U (LSE: SUS) said it is trading well and that results are expected in line with market expectations

Dual listed oil and gas exploration company Range Resources (ASX: RRS; AIM: RRL) has announced a further update on the Company’s US Gulf Coast interests.

Atlantic Coal (AIM: ATC) has completed a placing of 80 million new ordinary shares at a price of 0.5p per share, raising £400,000. The placing which represents 5.5% of the enlarged share capital is within the company’s current authorities and the proceeds will be used for working capital purposes, in particular to complete the company’s capital reinvestment plans at the Stockton Colliery.

Ahead of its results for the year ended 31 December 2009, Telit Communications (AIM: TCM) said it in a brief trading update unaudited revenues for the twelve months will be approximately €63 million, up 7% on the previous year. The revenues are in line with market expectations.

Victoria Oil & Gas (AIM: VOG) has spudded well La-106 at its Logbaba gas and condensate field in Cameroon after changing its design to target the most prospective areas of the existing discovery.

Cinpart (AIM: CINP) said Active Energy unit has been awarded a contract by the Ministry of Justice (MOJ) as part of a multi phased tender process. Under the £900,000 contract, Active Energy will provide 55 VoltageMaster units at 52 courts throughout England and Wales.

European Nickel (AIM: ENK) has repaid the US$5 million bridging loan given by Endeavour Financial Corp after undertaking a placing last week to raise US$19.4 million.

Brokers Daniel Stewart and Charles Stanley followed up S&U’s (LSE: SUS) positive trading update this morning with reiterated 'buy' recommendations and respective price targets of 575p and 550, the latter raised from a previous 500p.

Ascent Resources (AIM: AST) has commenced the drilling of the PEN-101 well at the Peneszlek natural gas project in Hungary, targeting a Miocene gas formation within a structure defined on 3D seismic of the area acquired in 2008.

Chromex Mining (AIM: CHX) has recommenced mining at its Stellite opencast chrome mine on the Western Limb of the Bushveld Complex in South Africa as pricing and chrome market conditions improved, which has led to the drawdown of its run-of-mine (ROM) stockpiles over the past six months.

Edison Investment Research issued a note on Biocompatibles (AIM: BII), saying the currently ongoing clinical trials of the medical technology group’s diabetes product were ignored by the market, while significantly enhancing the research house’s indicative value estimate, which currently stands at a roughly 30% premium to the stock’s market value.

London-based stockbroker Daniel Stewart issued a note on human tissue and human tissue based services group Asterand (LSE: ATD), saying it still sees 50% upside for the share from the current level. The broker said that Asterand has a strong pipeline of business despite recent changes to buyer behaviour which has led to orders being spread over a longer period than planned.

Kiotech International (AIM: KIO) said it has performed in line with market expectations and expects to report a very successful 2009 full year, achieving significant trading growth at its Kiotechagil division, while the recently acquired animal nutrition and additives business Optivite contributed to the profits in the final quarter.
The feed additives supplier will release its results for the year to 31 December in mid April 2010.

Mediterranean Oil & Gas (AIM: MOG) has doubled the 2P (proven and probable) reserves for the Ombrina Mare oil and gas field to 40 mmbbls (million barrels), including an increase in 1P (proven) reserves to 12 mmbbls. The shares rallied nearly 15 percent in early trade on the news.

Tantalus Rare Earths AG (XETRA:TAE) announced the first preliminary assay results of their massive sampling campaign conducted on its concession on the Ampasindava Peninsula in northern Madagascar between September and December 2009. The results show "spectacular" grades of up to 31% of total rare earth oxides. The remaining results are pending and expected later this month.

In a trading update covering the year ended 31 December 2009, China Biodiesel International (AIM: CBI) said it reaped the benefits of a continued recovery in the Chinese economy during the second half of 2009. CBI increased total shipment volumes by approximately 65% to 39,000 tonnes compared to 25,273 in the previous year. The improved output was supplemented by the addition of the company’s new facility in Xiamen, which was fully operational for 8 months of the year.