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British Airways and Lloyds post big gains, Shell and BP retreat, FTSE 100 stays in the red

Published: 22:04 05 Aug 2009 BST

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The Footsie was little changed by the end of the day, slipping by over 20 points, with a strong rise from financials being largely cancelled out by a weak performance from commodity focused stocks.

 

Lloyds (LSE: LLOY) expectedly became the leading newsmaker of the day, being the latest major bank to present its interim reports. Just like HSBC (LSE: HSBA) and Barclays (LSE: BARC), which released their reports on Monday, Lloyds posted steep losses amid growing bad debts, yet Lloyds CEO Eric Daniels considered the performance “resilient” despite “margin pressure and a weak economy,” saying the bank is positioned to outperform over the mid term. Encouraged by the positive outlook and the lower than expected losses, investors were buying heavily, helping Lloyds to an 11% hike.

 

Royal Bank of Scotland (LSE: RBS), which is scheduled to present its interim report on Friday, climbed 3.3% on today’s update from Lloyds. Barclays also improved 5%.

 

Commercial property companies kept rising after putting up a strong performance this week. British Land Co (LSE: BLND) and Land Securities Group (LSE: LAND) added 2.6% and 6.2% respectively.

 

Property giant Hammerson (LSE: HMSO), which was downgraded by KBC Peel Hunt to “hold” from “buy” on Monday after posting disappointing interim results, rebounded with a 6% gain, driving the rest of the sector up.

 

However, housebuilders failed to gain much traction.  Taylor Wimpey (LSE: TW) reported steeper losses for H1, but said trading conditions improved. The housing sector’s reaction was mixed. Taylor Wimpey itself retreated 1.7%. FTSE 250 builder Redrow (LSE: RDW) added less than 1%, but counterpart Barratt Developments (LSE: BDEV) surged 7.6%. Builders merchant Travis Perkins (LSE: TPK), also a FTSE 250 constituent, lost 1.6%.

 

Airline British Airways (LSE: BAY) said on Monday it will soon slash baggage allowance from two bags to one and added today that charges of £35 and £40 will apply to passengers travelling with sports equipment in hopes to generate more revenue. The statement helped the airline gain almost 8%.

 

Commodities

 

Oil declined, dragging down the oil and gas sector, while precious and base metals mostly improved, balancing out the miners.

 

Following yesterday’s strong growth, Gold retreated back to US$960/ounce by the end of the day. Other precious metals followed the trail and also reversed early gains. Silver was up in the morning, but later declined to US$14.61/ounce, Platinum pulled back to US$1266/ounce.

 

Base metals took a different path and rose. Copper upped to US$2.79/pound, Zinc climbed to US$0.85/pound.  Nickel surged further, eclipsing the US$9/pound mark and reaching US$9.04/pound.

 

Oil and gas sector under pressure

 

While BP (LSE: BP) moved south 1.4% and Shell (LSE: RDSB) lost 3.6%. Oil and gas player BG Group (LSE: BG) followed the seniors with a 3% drop.

 

The end of the day declines were largely due to the declines in oil benchmarks. Brent spot crude retreated slightly standing at US$73.1 per barrel at the end of the day, while NYMEX crude also was in the negative with a US$0.14 drop.

 

Mid-tier oil companies also headed south. Cairn Energy (LSE: CNE) lost slightly, while Tullow Oil (LSE: TLW) and Dragon Oil (LSE: DGO) both lost 2%. Dana Petroleum (LSE: DNX) also was in the red, but fared slightly better than the rest of the pack with insignificant losses.

 

Some oil juniors went against the tide as Max Petroleum (LSE: MXP) rose 1% on top of yesterday’s 11% hike. US focused junior Empyrean Energy (AIM: EME) added 3.8%. Ukraine focused gas producer, Regal Petroleum (AIM: RPT) also gained, climbing 1.5%.  Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) climbed 1.8% today.

 

Precious Metal Companies on decline

 

Aquarius Platinum (LSE: AQP) retreated 1.3% to 273p per share. Johnson Matthey (LSE: JMAT) slipped 1.1%, while Lonmin (LSE: LMI) rose 2%.

 

Gold producers were also balancing around their opening levels. Peter Hambro Mining (LSE: POG) was up just above 1%, while Randgold Resources (LSE: RRS) took a dive, shedding 3.7% after Red Back Mining (LSE: RBI) declined to match its takeover offer for Moto Goldmines (AIM: MGL), leaving Randgold as the sole bidder.

 

Silver producer and FTSE 100 constituent Fresnillo (LSE: FRES) declined by less than 1%, while FTSE 250 silver miner Hochschild Mining (LSE: HOC) recovered from early losses to finish flat.

 

Junior Gold companies were more mixed, but there were several noteworthy risers, including; Oxus Gold (AIM: OXS) up 8.7%, Goldplat (AIM: GDP) climbed 5.6%. Copper and gold focused junior, EMED Mining (AIM: EMED) jumped almost 12%. Cluff Gold (AIM: CLF) was up below 1%. Patagonia Gold also improved, adding 1.5%. Norseman Gold (AIM: NGL) improved 2%.

 

Base metal miners mixed

 

Majors Anglo American (LSE: AAL) managed to stay afloat with small gains, while other majors Rio Tinto (LSE: RIO) and BHP Billiton (LSE: BLT) both lost almost 3%.  Xstrata (LSE: XTA) was down 2%.

 

Copper miners were mixed. Vedanta Resources (LSE: VED) retreated after making good gains ini the morning, Antofagasta (LSE: ANTO) slumped 1.8% and Kazakhmys (LSE: KAZ) climbed 3%. First Quantum Minerals (LSE & TSX: FQM) posted insignificant losses.

 

London’ only listed pure iron ore producer, Ferrexpo (LSE: FXPO) impressed again with a 10% gain after reporting better than expected first half results.

 

Shares in junior miner Noventa (AIM: NVTA) continued soaring following Monday’s announcement that the Marropino Tantalum mine in Mozambique will be profitably restarted. After climbing 100% in two days, Noventa added 5.8% today. Mineral sands producer, Kenmare Resources (LSE: KMR), improved 3.7%.

 

Junior miner Maghreb Minerals (AIM: MMS) rallied 16%, while zinc mining and recycling specialist, ZincOX (AIM: ZOX) initially rose, but ended the day down 1.4%.  Uranium and copper explorer Kalahari Minerals (AIM: KAH) continued its unrelenting move higher, rising a further 7.5% today. Laterite nickel specialist, European Nickel (AIM: ENK) added 1.2%.

 

Insurance, banks, private equity rise

 

Lloyds’ interim report lent yet more optimism to the banking sector, which has been on the rise following the positive reports from HSBC and Barclays earlier in the week.

 

HSBC (LSE: HSBA) and Barclays (LSE: BARC) followed Lloyds and RBS, adding 1% and 2.8% respectively.

 

Standard Chartered (LSE: STAN) rose 2%.

 

Insurers were mixed and did not show much movement following yesterday’s weak performance. Aviva (LSE: AV) and RSA Insurance Group (LSE: RSA) both rose over 2% today. Old Mutual (LSE: OML) lost less than 1%. Legal & General (LSE: LGEN) was flat and Standard Life (LSE: SL) tumbled 2.3%. The insurer said today expects the UK economy to start recovering this year, projecting the FTSE 100 index to reach the 5,000 by the end of this year or in early 2010.

 

Prudential (LSE: PRU) was the group’s highest riser with a gain of 4.4%.

 

Large Cap News

 

Vancouver-based miner Red Back Mining (TSX: RBI) Inc said today it has decided not to match Randgold Resources’ acquisition proposal to Moto Goldmines Limited (TSX: MGL), a DR Congo operating gold miner.

 

Red Back’s backing off means that Randgold Resources (LSE: RRS) is now the sole bidder for Moto, which has already said it favoured Randgold’s joint cash and share bid with AngloGold Ashanti worth a total of C$546 million. Red Back’s offer valued Moto at C$513 million.

Lloyds Banking Group PLC reported a pretax loss of £3.96 million in the first half to June, compared with a profit of £2.78 million a year earlier, mainly as a result of a £10.9 billion rise in bad debt in the wake of its takeover last year of Halifax owner HBOS.

 

Impairments in the first half thus rose to £13.4 billion, and the bank ascribed around 80 percent of that to legacy HBOS loans, adding that “approximately three quarters of the group’s first half impairment charge related to assets are expected to be included in the Government Asset Protection Scheme.”

 

Design and engineering consultancy WS Atkins plc (LSE: ATK) said the group was able to adapt to the challenging trading conditions and the overall outlook remains at the same level.

 

The group, best known for providing engineering consultancy and design for the London Underground, released its interim management statement today, stating Q1 revenues were broadly flat compared to last year and reported net funds in excess of £200 million.

 

Housebuilder Taylor Wimpey PLC (LSE: TW) widened its pretax loss before exceptionals in the first half, but said trading conditions improved significantly during the period.

 

Pretax loss before exceptionals widened to £68.9 million in the six months to end-June from 0.3 million previously, while revenue from continuing operations fell to £1.13 billion from £1.564 billion.

 

Carpet retailer and FTSE 250 constituent Carpetright plc (LSE: CPR) said sales in Q1 increased, helped by 14 new stores in the UK and Ireland.

 

The company reported that sales in the UK and Ireland improved by 6.6%, while like-for-like store sales were up 1.4%, marking the first quarter of growth in the UK and Ireland since Q4 2007/2008.

 

Carpetright’s business in the rest of Europe (the Netherlands, Belgium and Poland) was also advancing its positions in the market, though at a slower pace, reflecting the “weakening economic conditions.” While sales were up 0.9%, like-for-like sales dipped 2.8% in these countries.

 

Premier Foods PLC (LSE: PFD) reported a 5.6 percent rise in trading profit in the first half while turnover rose 3.5 percent from the previous first half to £1.248 billion.

 

Trading profit, or operating profit from continuing business before one-off items and goodwill was £123.6 million in the six months to June 27 2009, up from £117.1 million.

 

South African paper and packing group Mondi (LSE: MNDI) said H1 revenue slipped 20% year on year, while the company’s underlying operating profit collapsed 48% to €138 million.

 

The company’s underlying pretax profit slid 61% to €81 million and headline losses per share amounted to 0.8 euro cents, down 104% from H1 2008.

 

Small Cap News

 

Xtract Energy PLC (AIM: XTR) said it has today completed the final optional subscription payment of US$1.75 million to Extrem Energy AS, raising its stake in the Turkish group to 34 percent from 27 percent.

 

Marketing services provider Cagney plc (AIM: CGNY) announced today it was seeking shareholders’ approval to delist, hoping to turn to other sources of capital.

 

Cagney, which was admitted to trading on AIM in February 2006, is lamenting the lack of analytical coverage of AIM-listed companies, which prevented investors from buying stock at a reasonable price. This contributed to the low liquidity of Cagney’s shares with a very limited free float as 44% of the stock is held by four managers.

 

Regency Mines PLC (AIM: RGM) expects to receive first results from drilling on its Mambare lateritic-nickel-cobalt project in Papua New Guinea early this month, with the rest to follow shortly thereafter.

 

The first 104 holes were sampled at the end of 2008, and the remaining 232 in June this year.

 

Investors reacted positively to news from African Diamonds (AIM: AFD) that it had successfully renewed two of its key prospecting licenses for a further two years.  The licenses, PL004 and PL007, contain several known kimberlites, including AK8, AK9 and BK5.

 

Both licences are in located near the world class Orapa and Damtshaa mines, operated by Debswana – a joint venture between the Botswana Government and Debeers.

 

Product support services provider Regenersis plc (LSE: RGS) increased its footing in the after-sales mobile phone sector with the acquisition of outsource service provider Total Repair Solutions Limited (TRS), which was announced today along with a placement of over 8 million new ordinary shares to fund the transaction.

 

Asset management software provider StatPro Group PLC (AIM: SOG) said it has had an “extremely successful” first half and that trading was ahead of its expectations, and that it is confident in the outlook for the rest of the year.

 

Shares were up nearly 13 percent on the news by midmorning.

 

Then group’s pretax profit, adjusted for exceptional items and amortisation, soared to £3.19 million in the six months to end-June 2009 from £1.96 million a year earlier, while revenue rose 19 percent to £15.5 million.

 

Financial trading software maker Patsystems PLC (AIM: PTS) swung to a pretax profit in the first half, saying it remains confident that the business will achieve its targets for 2009 and that the opportunities for business growth for 2010 and beyond are excellent.

 

Daniel Stewart issued a note on Nighthawk Energy PLC (AIM: HAWK), saying it remains a buyer of the US focused hydrocarbon production and development company with an 88 pence a share target price, giving a approximately 111 percent upside to the current level.

 

In a note headlined “On the right path”, the broker said Nighthawk ticks the correct boxes in its bid to prove up its resource base, and that the 50 percent controlled Jolly Ranch project in Colorado remains the crown jewel of the group with an 87 percent contribution to its oil in place of 844 mmboe.

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