Overview: the FTSE 100 declined 0.4% today after today’s report from the US Labor Department showed that initial jobless claims unexpectedly increased 13,000 to 462,000 last week.
In other news, the producer price index in the US rose 0.4% in September, which was double the expected increase.
Specialty chemicals firm Johnson Matthey (LON:JMAT) emerged atop the leaderboard with a 3% gain. Xstrata (LON:XTA) advanced 2.7% while silver producer Fresnillo (LON:FRES) and base metal miner Rio Tinto (LON:RIO) climbed 2.5%. Chipmaker ARM Holdings (LON:ARM) and defence contractor Cobham (LON:COB) tacked on nearly 2%.
Gold miner African Barrick Gold (LON:ABG), which today cut its production guidance for 2010, was the heaviest faller in the FTSE 100 with a 10% loss. Royal Bank of Scotland (LON:RBS) followed with a 4.5% decline. Sector peers Barclays (LON:BARC) and Lloyds (LON:LLOY) lost 4% and 3% respectively. Software developer Autonomy Corp (LON:AU) retreated 2.7%. hedge fund manager Man Group (LON:EMG) and Essar Energy (LON:ESSR) shed just over 2%.
US stocks were off to a negative start. The Dow Jones Industrial Average and the NASDAQ composite declined 0.2%, while the broader S&P 500 index was down 0.3%.
Commodities
Oil prices rally
Oil prices were on the rise today after US inventories unexpectedly fell, while the US dollar remained weak.
American Petroleum Institute (API) said yesterday that US crude oil stockpiles shed 1.9 million barrels, falling the most since July.
A more closely watched report from the US Energy Department is due out later today.
November Brent Crude rose to US$84.96/barrel, while US light, sweet crude for November delivery reached US$83.63/barrel on the New York Mercantile Exchange (NYMEX).
Blue chips oil and gas producers were in decline today. BP (LON:BP) shed 1.5%, while fellow supermajor Shell (LON:RDSB) posted a small loss, as did Cairn Energy (LON:CNE), Tullow Oil (LON:TLW) and BG Group (LON:BG).
Amec (LON:AMEC) was flat, while another oil and gas engineering firm Petrofac (LON:PFC) dropped 1.2%.
Midcaps were mixed. Melrose Resources (LON:MRS) was in the lead with a 1.4% climb. Heritage Oil (LON:HOIL) followed with a 1% gain and JKX Oil & Gas (LON:JKX) stood just above the opening level.
Salamander Energy (LON:SMDR) moved in the opposite direction, dipping 1.9%. Premier Oil (LON:PMO) declined 1%, while Dragon Oil (LON:DGO) and Soco International (LON:SIA) declined marginally.
Dana Petroleum (LON:DNX) was flat.
Services companies Wood Group (LON:WG) and Wellstream Holdings (LON:WSM) were little moved.
Energy sector focused investor Xtract (LON:XTR) was among the top risers in the sector with a 20% rally. US focused oil and gas company Nighthawk Energy (LON:HAWK) followed, advancing 7.5%.
Gold sets another record
Gold reached new record highs at US$1,387/oz today amid continuing weakness in the US dollar.
The American currency declined amid expectations of further quantitative easing (QE) by the Federal Reserve.
Gold stood at US$1,376/oz in late afternoon, while silver and platinum reached US$24.33/oz and US$1,704/oz respectively.
Major mining stocks were mixed. Gold producer African Barrick Gold (LON:ABG) slipped 7.5% after cutting its 2010 production guidance, while peer Randgold Resources (LON:RRS) lost 1%.
Silver miner Fresnillo (LON:FRES) added 2.2% and platinum producer Lonmin (LON:LMI) was unmoved.
Midcaps did better as gold miner Petropavlovsk (LON:POG) posted a small gain, Aquarius Platinum (LON:AQP) added 1% and silver producer Hochschild Mining (LON:HOC) advanced 2.3%.
Norseman Gold (LON:NGL), which operates Australia’s longest continuously running gold mining operation, and gold and copper focused investment holding company Mariana Resources (LON:MARL) were among the top performing small caps with gains of over 5%.
Base metals decline
Copper and nickel climbed to US$3.82/lb and US$11.18/lb, while zinc reached US$1.092/lb.
Rio Tinto (LON:RIO) and Xstrata (LON:XTA) led the base metal miners with gains of 2.5%. Eurasian Natural Resources (LON:ENRC) followed, tacking on 1.1%. Antofagasta (LON:ANTO) and Kazakhmys (LON:KAZ) posted small gains.
Vedanta Resources (LON:VED) and Anglo American (LON:AAL) lost 2% and 1% respectively.
BHP Billiton (LON:BLT) was little moved.
London’s only listed pure iron ore producer Ferrexpo (LON:FXPO) rose marginally.
Zinc producer ZincOx Resources (LON:ZOX) was among the top performing small caps with a 5% gain.
Banks, insurers, private equity
Standard Chartered (LON:STAN) posted a small gain, while other banking stocks declined. Part-nationalised banks Lloyds (LON:LLOY) and Royal Bank of Scotland (LON:RBS) retreated 4.5% and 3% respectively. Barclays (LON:BARC) lost nearly 4%, while HSBC (LON:HSBA) was down 1.2%.
Not much was going on in the insurance sector today.
Admiral Group (LON:ADM) and Standard Life (LON:SL) declined marginally, while RSA Insurance Group (LON:RSA) tacked on less than 1%.
Legal & General (LON:LGEN) declined 1.2%.
Aviva (LON:AV), Old Mutual (LON:OML) and Prudential (LON:PRU) made little headway.
Private equity group 3i (LON:III) lost 1.6%.
Small Cap Movers
Other notable movers among the small caps included Africa focused investor Lonrho (LON:LONR), which added 6.5%.
Small Cap News
Thor Mining PLC (LON:THR, ASX:THR) has entered into an arrangement for the private placement of 57,000,000 voting CDI’s in the company to sophisticated investors at 1.6 cents, raising A$912,000 before expenses.
Linc Energy (ASX: LNC, OTCQX: LNCGY) has exercised its option to acquire 10 per cent of AFC Energy (LON:AFC) by investing £2.97 million at a discount of 7.5 per cent to the 30 day VWAP, equalling an exercise price of 17.72 pence per share.
Caza Oil & Gas (LON:CAZA; TSX:CAZ) has finished drilling the Caza 162 well on the Windham Wolfberry Prospect, and logging data indicates potential pay zones in four separate formations.
Synchronica (LON:SYNC, TSX-V:SYN) has completed the iseemedia takeover, as it closed the bid with a 86% stake in the Canadian company. The remaining equity will now be bought via a statutory process, before 31 December 2010.
Shares in PetroLatina (LON:PELE) fell 6% in morning trade after the company lost a project in Colombia. The Agencia Nacional de Hidrocarburos (ANH) has reversed its previous decision to award block LLA57 in the Llanos basin to PetroLatina and handed it over to a third party. PetroLatina pledged to bid for new acreage in the Llanos basin in forthcoming bidding rounds to fulfill its goal of gaining representation in all three of the most prolific basins in Colombia namely Middle Magdalena, Putumayo and Llanos.
Europa Oil & Gas (LON:EOG) has raised funds to advance its key projects in Romania and the UK, while reporting that revenues in the full year 2010 rose to £3.1 million.
Red Rock Resources’ (LON:RRR) shareholding in Jupiter Mines (ASX: JMS) was boosted in value overnight, as the iron mine developer jumped 20% on the Australian Securities Exchange.
Stellar Diamonds (LON:STEL) has increased diamond production at the Mandala mine by 31% in the third quarter from the second quarter. In the three months ended 30 September, 18,291 carats were produced at the Mandala mine in south east Guinea. The company sold 18,549 carats in the period, at an average price of US$33 per carat to generate US$609,000 in revenue.
Medusa Mining (LON:MML, ASX:MML, TSX - MLL) expects to move up to the main board of the London Stock Exchange on 28 October 2010. The plans to move up from the AIM market were initially announced back in April. In its Daily Market Report, Fairfax called Medusa Mining a high quality gold producer delivering on promises with significant organic growth potential.
Anglo Asian Mining (LON:AAZ) reiterated its production guidance to address inaccurate press coverage in Azerbaijan. The company said it expects to produce 60,000 ounces of gold in 2010. A positive site visit and a rise in commodity prices have prompted Numis analyst Andy Davidson to raise his price target for Anglo-Asian. It moves to 70p a share from 50p - well above the current price of 43p. And it values AAZ at a middle-of-the-range 1.25 times NAV.
Telit Communications’ (LON:TCM) subsidiary Telit Wireless Solutions said it will soon launch a new module featuring wireless M-Bus transfer technology that forms the basis of smart meters. The launch of the ME50-868 module into the market will take place in November 2010.
Kea Petroleum (LON:KEA) has been granted a Petroleum Exploration Permit (PEP) in New Zealand, over a prospect which was previously discovered by Shell around 20 years ago, the Mercury prospect.
Kryso Resources (LON:KYS) has published a bankable feasibility study (BFS) for the Pakrut gold project in Tajikistan. The BFS currently anticipates total production of 857,000 ounces of gold and 123,000 ounces of silver over a 14-year mine life, beginning in the second half of 2012.
Mariana Resources (AIM: MARL) this morning removed another layer of risk from its promising Las Calandrias gold-silver project by acquiring the freehold surface rights to the licence area in Patagonia.
Nighthawk Energy (LON:HAWK, OTCQX:NHEGY) announced this morning that it had arranged a £25 million equity finance facility (EFF) as it set a deadline for bids from farm-in partners to its Jolly Ranch oil project in Colorado.
Large and MId Cap News
African Barrick Gold (LON:ABG) said production in the third quarter was reduced by 10,000 ounces after 40% of its mining department was suspended on suspicion of criminal activity.