Overview: the FTSE 100 was down 20 points at midday, being dragged down by the commercial property sector with major property stocks showing up among the leading fallers. Financial stocks have done well so far with insurers and banks sitting atop the leaderboard with good gains, while software developers are trying to catch up.
Mining and energy stocks are still weak due to the lack of changes in oil and metals prices, which remain low.
The UK GDP data released early in the morning showed a lesser than expected Q2 contraction of 0.6% compared to the projected 0.7%, largely due to a strong performance in the construction sector. Yet the news failed to provide much of a boost to the stocks. Stock index futures fell in the US, further weighing the Footsie down.
The top fallers list was crowded with property companies with Land Securities Group (LSE: LAND), British Land (LSE: BLND), Hammerson (LSE: HMSO) and Segro (LSE: SGRO), all of which declined 2.5-3%. Platinum miner Lonmin (LSE: LMI) led the pack with a drop of 3.5%.
Insurer Legal & General (LSE: LGEN) was the runaway winner in the FTSE 100 with a 4.4% climb, while RBS (LSE: RBS) and caterer Compass Group (LSE: CPG) followed, rising 2.7%. LGEN’s sector peer Aviva (LSE: AV) also added 2.7%.
Commodities
Oil prices did not show much improvement over yesterday’s levels. Brent Crude for November delivery traded at US$65.15/barrel, while US light crude for November delivery slid to US$66.47/barrel.
Oil and gas stocks didn’t show much movement in early trade.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) lost less than 1%, as did fellow FTSE 100 constituent Tullow Oil (LSE: TLW). Other blue chips Petrofac (LSE: PFC) and Cairn Energy (LSE: CNE) added more than 1%. BG Group (LSE: BG) was flat at 1,090 pence per share.
In the FTSE 250, Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) made little headway, while Dana Petroleum (LSE: DNX) outperformed the sector with a 2% gain.
Kazakhstan operating Max Petroleum (AIM: MXP) led the sector with a gain of almost 10%. US and Latin America operating Pan Andean Resources (LSE: PRE) and EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) both declined over 6%.
Europe focused oil and gas developer Ascent Resources (AIM: AST) also was in selling more, shedding 3.2%.
Silver and Platinum slide to drag miners down, Gold stays below $1,000
Precious metals remained in decline. Gold was fluctuating between US$991/oz and US$993/oz, while Silver and Platinum slid to US$16.09/oz and US$1,268/oz respectively.
Most mining stocks fell on lower prices. Blue chip gold producer Randgold Resources (LSE: RRS) declined 1.7%, while fellow FTSE 100 constituent silver miner Fresnillo (LSE: FRES) lost 1%. Platinum miner Lonmin (LSE: LMI) was at the bottom of the pile with a 3.5% slump.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 1.6%.
Mid caps also turned negative in early trade, except for Aquarius Platinum (LSE: AQP), which managed to hold on, while silver miner Hochschild Mining (LSE: HOC) and gold producer Petropavlovsk (LSE: POG) lost 1.7% and 2.6% respectively.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) was the runaway leader among the small caps, rallying 20%. London listed Australian gold producer Leyshon Resources (AIM: LRL) and Western Australia operating Norseman Gold (AIM: NGL) dipped 5% and 6% respectively. Argentina operating gold explorer Patagonia Gold (AIM: PGD) and Tajikistan operating gold miner Kryso Resources (AIM: KYS) both lost 3.5%.
South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) went in a different direction, slipping over 5%, as did Turkey and Saudi Arabia operating gold producer KEFI Minerals (AIM: KEFI), after releasing its interim results.
Shares in African focused gold miner Pan African Resources (AIM: PAF) and Canadian based junior gold developer Rambler Metals and Mining Plc (AIM: RMM & TSX- V: RAB) declined 3.5% and 4.2% respectively.
Mining sector still in decline as copper and nickel remain weak
Base metals continued their decline. Copper was down to US$2.66/pound, while Nickel dropped to US$7.49/pound, while Zinc remained at US$0.83/pound.
The world’s largest miner BHP Billiton (LSE: BLT) lost a little less than 1%. With the exception of Vedanta Resources (LSE: VED), Antofagasta (LSE: ANTO) and Eurasian Natural Resources (LSE: ENRC), all of which were flat in early trade, all other major base metals miners declined 1% or more.
Kazakhmys (LSE: KAZ) was down 1%, Anglo American (LSE: AAL), Rio Tinto (LSE: RIO) and Xstrata (LSE: XTA) shed almost 2%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, shedding 1.2%.
Iron ore focused investor Red Rock Resources (AIM: RRR) led the juniors with a 17% surge. Mozambique operating tantalum miner Noventa (LSE: NVTA) and nickel and iron ore exploration junior Landore Resources (AIM: LND) added more than 4%.
Indonesia operating coal miner Churchill Mining (AIM: CHL) was up 3.5%.
South American focused junior miner Herencia Resources (AIM: HER) went in a different direction, moving down 3.5%.
Banks, insurance, private equity
Financial stocks mostly rose in early trade. Bailed out bank Royal Bank of Scotland (LSE: RBS) was in the lead with a 2.4% gain. Fellow partly nationalised bank Lloyds (LSE: LLOY) followed with a 1.2% advance, as did Standard Chartered (LSE: STAN). Barclays (LSE: BARC) added 1.7%, while HSBC (LSE: HSBA) opened with marginal losses.
Insurers were mixed. Legal and General (LSE: LGEN) led the blue chips in the morning with a 4.4% climb. Aviva (LSE: AV) also did well, rising 2.8%. Standard Life (LSE: SL) almost caught up with a gain of about 2.2%. Prudential (LSE: PRU) added 1%, while Old Mutual (LSE: OML) was flat. Friends Provident (LSE: FP) and RSA Insurance Group (LSE: RSA) started the day with marginal losses.
Private equity group 3i (LSE: III) was down 1.8%.
Large and Mid Cap News
International catering firm Compass Group (LSE: CPG) updated investors ahead of its full year results in November. The statement highlights an encouraging fourth quarter with increasing margin growth and favourable currency exchange factors. Compass is expecting to achieve a 14% increase in earnings per share.
Ahead of its full year results statem,ent in November, UK pub company Enterprise Inns (LSE: ETI) released a reassuring trading update, noting a a stabilising environment in which it expects core performance to remain in line with expectations. Investors welcomed the statement, with Enterprise shares rising almost 5% this morning.
Precision equipment maker Renishaw (LSE: RSW), said order intake has improved since the June 30 financial year-end - which saw exceptional adverse trading conditions -, and is currently running ahead of sales output. It expects to achieve revenues of approximately £12m for September, some 15 % ahead of the average run rate for the last five months.
Small Cap News
Rambler Metals & Mining PLC (TSX: RAB; AIM: RMM) said it plans to raise approximately £5.5 million before expenses through a private placing of up to 27.5 million shares at 20 pence each, or approximately C$0.345 per share.
South America and Gulf of Mexico operating Irish gas company Pan Andean Resources (AIM: PRE) said revenues and earnings in the full year to 31 March increased, and also reported good progress in South America, but expects its income from the US operations to decline as drilling is unlikely to continue in 2009 due to the fall in gas prices.
KEFI posts H1 losses of £767,000, exploration progress in Turkey and Saudi Arabia remains steady Saudi Arabia and Turkey operating gold and copper miner KEFI Minerals (AIM: KEFI) extended its losses to £767,000 in H1, while making progress on its exploration activities in Turkey and Saudi Arabia, funded by recent placings that helped raise over £1 million.
China focused gold explorer and miner Central China Goldfields (AIM: GGG) is looking forward with optimism and is ready to seek undervalued and underdeveloped projects, adding it will be assessing various new opportunities over the next six months. It is well funded and has a successful exploration team.
Turkey operating gold miner Ariana Resources (AIM: AAU) released its interims, reporting a narrower pre-tax loss of £191,000 compared to £343,000 for H1 2008, along with progress at its projects in Turkey, achieving first gold production at Kiziltepe and making discoveries at the Ardala project in north-eastern Turkey.
Norseman Gold PLC (AIM, ASX: NGL) said JD Slater and family have acquired 425,000 more shares in the company, raising their holding to 6.975 million shares, or 4.01 percent of the capital.