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RBS, Lloyds, HSBC, RSA climb, FTSE 100 returns to positive ground

Published: 21:36 29 Jul 2009 BST

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The key indices finished in the blue today after most stocks put up a lacklustre performance yesterday to bring FTSE 100 down and put the long anticipated end to the record matching winning streak of 11 straight sessions of gains.

 

Miners were once again making noise after BHP Billion (LSE: BLT) announced it settled prices for over half of iron ore volumes for 2009, marking steep discounts of about a third of last year’s price levels. BHP put up slight declines, slipping by a little over 1% and dragged down the rest of the mining sector down with most other key players in the red in the morning. Yet miners managed a comeback surging back to the opening level after slight declines and remained on positive territory until the end of the day.

 

Packaging group Rexam was once again on decline, ending the day as the market’s leading faller, tumbling 8% after unveiling a £351 cash call in hopes to pay off a part of its £2.1 billion debt and prevent its credit rating from relegating to junk status. Rexam also scrapped its interim dividend, as did car dealer Inchcape (LSE: INCH), being in the midst of a successful cost cutting campaign that helped it post lesser than expected profit declines and boost stock value by 17%, also announcing another round of layoffs and site shutdowns.

 

Other high profile movers included quality and safety services provider Intertek Group, which weighed on FTSE 100 with a 4% fall after broker Noble downgraded its rating to “negative” from “positive” and infrastructure software group Autonomy Corp (LSE: AU), which landed a USD 20 million deal from a major Wall Street Bank, but still shed 2%.

 

On the positive side, asset manager Schroders plc (LSE: SDR) led the list of FTSE 100 top risers with an almost 5% hike after Morgan Stanley upgraded its rating from “underweight” to “overweight” and revisited the price target, lifting it to 1,045p from 710p.

 

Eurasian Natural Resources (LSE: ENRC) chimed in with a 4.1% gain to balance out the mining sector and uplift the FTSE 100.

 

Among other notable news, chocolate maker Cadbury (LSE: CBRY) reported a 23% hike in underlying profit before tax for H1 2009 and rose 1.5%.

 

Luxury car maker Rolls-Royce Group (LSE: RR) contributed to the positive drive by adding 2%.

 

Commodities

 

Commodities continued falling following the market correction after last week’s surge.

 

Gold continued to decline, arriving at USD 931/ounce today. Silver fell further below the USD14/oz mark and was at USD 13.49/ounce. Platinum shed USD 28 and slipped to USD 1165/ounce.

 

Base metals also declined. Copper pulled back to this week’s lowest at USD 2.45/pound on mixed Chinese demand outlook, zinc slipped to USD 0.73/pound, while nickel declined by USD 0.18 to USD 7.36/pound. Brent Crude fell to USD 67/barrel.

 

Platinum miners were mixed after a disappointing performance on Tuesday. Lonmin (LSE: LMI) was up slightly, reaching 1265p. Aquarius Platinum (LSE: AQP) retreated 1.7% to 234p per share.

 

Johnson Matthey (LSE: JMAT) gained 1.7%.

 

Gold producers were little moved. Randgold Resources (LSE: RRS) extended yesterday’s losses by shedding 1%, Peter Hambro Mining (LSE: POG) was down 1.4% and Yamana Gold (LSE: YAU) held steady.

 

Silver producer and FTSE 100 constituent Fresnillo (LSE: FRES) and FTSE 250 silver miner Hochschild Mining (LSE: HOC) slipped 2.8% and 2.4% respectively.

 

Junior Gold companies were mixed. Oxus Gold (AIM: OXS) continued gains by adding 7%, Kryso Resources (AIM: KYS) and Pan African Resources (AIM: PAF) were flat, while Patagonia Gold (AIM: PGD) lost 1.6%. Medusa Mining (AIM & ASX: MML), Cluff Gold (AIM & TSX: CLF) and Norseman Gold (LSE: NGL) dipped4.5%, 1.5% and 3.3% respectively. Central China Goldfields (AIM: GGG) slipped 12.5%.

 

Mariana Resources (AIM: MARL) posted a 9.3% hike today.

 

Anglo American (LSE: AAL) and Rio Tinto (LSE: RIO) followed BHP and finished with small losses.

 

Copper miners were headed in different directions. Vedanta (LSE: VED) and Antofagasta (LSE: ANTO) were down 1% and 0.5% respectively, Kazakhmys (LSE: KAZ) finished flat after making gains early in the day and First Quantum Minerals (LSE & TSX: FQM) dipped slightly.

 

Cement operator Prosperity Minerals Holdings Ltd (AIM: PMHL) climbed 9% today.

 

Oil supermajors BP (LSE: BP.) and Shell (LSE: RDSB) gained 1% and 1.7% respectively after both slipped on Tuesday.

 

Cairn Energy (LSE: CNE) moved up 1.4%, Dragon Oil (LSE: DGO) and Dana Petroleum (LSE: DNX) both added less than 1%.

 

Juniors again were mixed. Victoria Oil & Gas (LSE: VOG) added just 1.3%, Empyrean Energy (AIM: EME) slipped 2% and Enegi Oil (AIM: ENEG) was flat after losing over 10% on Tuesday. Green Dragon Gas (LSE: GDG) was unmoved, while Gulfsands Petroleum (AIM: GPX) retreated insignificantly. Northern Petroleum (AIM: NOP) lost 4.5% today.

 

Oil & gas exploration and production company Ascent Resources (AIM: AST) had another good day, adding 9.4%. Max Petroleum (AIM: MXP) added 3% on top of yesterday’s significant gains.

 

Insurance, banks, private equity rise

 

After switching to the selling mode yesterday, financial shares posted gains today, led by the RBS, which climbed 3.7% after Lib Dem Treasury spokesman Vince Cable said it could take up to 10 years before partly nationalised banks could be transferred back to private ownership. Cable also said large banks like Lloyds and RBS should be broken up to mitigate the taxpayers’ risks.

 

Lloyds Group (LSE: LLOY) also gained on the news, adding 2.5%. HSBC (LSE: HSBA) surged 1.4% and Barclays (LSE: BARC) lost 1%. Standard Chartered (LSE: STAN) bounced back from yesterday’s 1.5% decline with a gain of 3.2%.

 

Insurance groups were on the rise. Legal & General (LSE: LGEN) was up 1.4%, Prudential (LSE: PRU) followed yesterday’s flat finish with a 1.6% gain, while Aviva (LSE: AV.) rose 3.5% and Old Mutual (LSE: OML) climbed 2.6%. RSA Insurance Group (LSE: RSA) gained 2.9%.

 

Private equity group 3i (LSE: III) was up 1.7%.

 

Large Cap News

 

Confectionery group Cadbury PLC (LSE: CBRY) said it has made good progress in the first half, with a strong chocolate performance and good growth in emerging markets more than offsetting a slow start in North America and continued softness in Europe, and it is raising its interim dividend 8 percent to 5.7 pence per share.

 

Revenue was up 13 percent at £2.767 billion, a 4 percent rise at constant currencies, generating an underlying pretax profit of £262 million, up from £212 million in the previous first half, a year-on-year rise of 24 percent and up 11 percent at constant currencies.

 

Shares in easyjet climbed higher this morning after the company reported solid results for the third quarter of its financial year.

 

The no-frills airline recorded a 12% increase in revenues to £721million, boosted by a 10.9% increase in revenue per seat to £51.42, or 4.8% on a constant currency basis.  Passengers carried also increased, by 2.9%, to 11.9 million with a 12% growth in passengers originating from mainlaind Europe.

 

Wireless connectivity solutions semiconductor group CSR PLC (LSE: CSR) jumped more than 12% in early trading after the company said second quarter revenues came in at the high end of guidance and that the integration of SiRF Technology Holdings, Inc was on track.

 

CSR is expecting to generate annualised cost synergies of US$35 million from the SiRF Technology acquisition, and confirmed it was on track to hit or even surpass this figure.

 

Halfords Group (LSE: HFD) reported solid trading for the 13 weeks to 3 July 2009, when taking into consideration the wider gloom amongst most retailers in the United Kingdom. Halfords rather unique market positioning, offering products and services related to automotive, cycling and outdoor activities continued to benefit it well.

 

Global operator of car dealerships Inchcape plc (LSE: INCH) released its half year report for the period ending 30 June 2009 today, revealing the profit decline turned out to not be as steep as was expected before.The business still posted a year on year profit fall of 57.6% to £65.4 million from £130.3 million a year ago, a significant decline but better than the forecast performance.

 

Consumer packaging group Rexam PLC (LSE: REX) announced a rights issue to raise £334.3 million after expenses as it reported swinging to a £30 million pretax loss in the first half on the back of £165 million in exceptional items.

 

The loss in the first half to the end of June 2009 compared to a pretax profit of 141 million previously and came about after exceptional charges relating to a plant closure and restructuring of its Plastic Packaging unit and a £116 million goodwill writedown from its OI Plastics acquisition. Sales improved to £2.516 billion from £2.191 bln.

 

Harvard International PLC (LSE: AIM) announced plans to sell its Medical Equipment division and surplus property portfolio and move its listing to the Alternative Investment Market.

 

The group is selling the division and the property portfolio to a consortium controlled by chief executive Daniel Harris and members of his family for £10 million in cash. Finance director Andrew Rose is also an investor in the consortium. The move will complete the sale of non-core assets.

 

Dragon Oil PLC (LSE: DGO) said the Dzheitune (Lam) 28/136 development well in the Caspian Sea offshore Turkmenistan was completed on schedule and tested successfully,  producing at a rate of 3.291 barrels of oil per day.

 

Rurther testing and optimisation is scheduled to take place over the coming weeks. The well is the third well to be completed from the refurbished Dzheitune (Lam) 28 platform.

 

Australian coal producer Coal & Allied (ASX: CNA), a subsidiary of Anglo-Australian miner Rio Tinto, released its first half results today, reporting substantial hikes in profits and revenues.

 

Coal & Allied’s profit after tax for H1 2009 was A$ 324 million, a 66% year on year increase from June 2008; H1 revenue was up 31%, improving to A$ 1,250 million, despite a slowdown in sales as the business benefited from a weaker Australian currency as its coal sales are U.S. dollar-denominated.

 

Arbuthnot Securities reiterated its ‘strong buy’ on software play smartFOCUS Group PLC (AIM: STF) and raised its target price to 14 pence from 10p.

 

The broker said in a note that smartFOCUS has had a good year so far with significant revenue and profit growth and it has have upgraded its forecasts twice so far this year. It believes the company is well placed to benefit from the growth in the digital marketing sector.

 

Kazakh oil and gas group Zhaikmunai LP (LSE: ZKM) said it is raising US$300 million through the issue of 75 million global depository receipts priced at US$4 each to new and existing investors.

 

Small Cap News

 

Italian gas developer, Po Valley Energy (ASX: PVE) has had one of its best quarters on record - on the verge of becoming a gas producer in the under-supplied Italian market.

 

Po Valley will bring its first Italian gas fields into production and is on track to connect its first production wells to Italy’s national pipeline grid during 2009.

 

The equation for Po Valley investors is attractive: low production costs, easy connection to an extensive pipeline grid and the historically strong price for gas in Italy.

 

Broker Hanson Westhouse has initiated coverage of Avocet Mining PLC (AIM: AVM) with a ‘buy’  rating and a target of 98.5 pence a share, saying in a note that the company has had a challenging 12 months at its main gold mining operations but that it believes investor confidence will return.

 

Problems at the Penjom mine in Malaysia and North Lanut in Indonesia led to reduced gold production and higher cash costs, but the company has implemented a number of operational initiatives to tackle the issues.

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