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Schroders and Lonmin lead FTSE 100 comeback, Gold and Silver up as recovery worries linger

Published: 21:43 04 Sep 2009 BST

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Overview: the FTSE 100 got off to a fast start, tacking on 50 points in the morning and holding on to the gains during the day to finish 60 points up and post its first day of gains this week. The Footsie’s surge was complemented by strong sessions in other global markets, as Asian stocks rose and the Dow Jones industrial average continued climbing in early trade today after recording a strong session on Thursday.

The indices went up as the recovery prospects started looking up after another round of updates from the US, including today’s non-farm payroll report from the Labour Department, which said the US shed 216,000 jobs in August, which is less than the expected 225,000. However, job losses for June and July were revised, adding some 49,000 lost jobs to the total. The news came on the heels of positive US manufacturing and home sales updates, which came out earlier.

It has been a slow day in the UK in terms of news as no significant updates were released and stocks were mostly responding to the news from global markets and changes in commodity prices.

Key movers: in the black

Platinum miner Lonmin (LSE: LMI) led the index for the whole day, rallying almost 9%. Insurers also impressed with most majors showing up on the leaderboard, led by Prudential (LSE: PRU), Aviva (LSE: AV) and Legal & General (LSE: LGEN).

Fund manager Schroders (LSE: SDRC) later joined in with a 5.4% gain.

Key movers: in the red

A few companies moved after broker updates, including publishing company Reed Elsevier (LSE: REL), which gained almost 1.6% after making it to Goldman Sachs’ conviction buy list. However, sector peer Pearson (LSE: PSON) declined after Goldman downgraded it to “sell” from “neutral.”

No FTSE 100 constituent lost 1% or more on Friday, with just a few companies closing lower, including oil giants Shell, and BP - which was down on profit taking after surging on Wednesday’s announcement of a major discovery in the Gulf of Mexico.

Commodities

This week’s better than expected supply data and mixed recovery outlook factored in commodity trading, as oil fluctuated within a narrow range, with key benchmarks ending up around the US$68/barrel mark before trading opened in London. Oil prices continued their decline as US light crude slumped to US$67.3/barrel and Brent Crude slipped below US$67/barrel, settling at US$66.36.

Oil and gas stocks were mixed.

British Petroleum (LSE: BP) was still correcting after announcing a major discovery in the Gulf of Mexico on Wednesday, while fellow supermajor Shell (LSE: RDSB) also posted marginal declines.

Save for BP and Shell, oil and gas stocks remained on positive ground throughout the day.

BG Group (LSE: BG) added less than 1%, while fellow FTSE 100 constituents Cairn Energy (LSE: CNE), Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) climbed 1.5%, 2% and 3.7%.

Sector peers from FTSE 250 also did well with Dana Petroleum (LSE: DNX) adding 3.2%, while Dragon Oil (LSE: DGO) climbed almost 2%. Heritage Oil (LSE: HOIL) posted modest gains, ending the day just 1% higher.

Juniors didn’t show much movement on Friday.

Diversified energy investment company Xtract Energy (LSE: XTE) and Latin American focused oil and gas company Gold Oil (AIM: GOO) led the sector, rallying 8.4% and 7.8% respectively. Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) and Iraq operating Irish oil company Petrel Resources (AIM: PET) also did well, gaining about 4% each.

Precious metals miners rally

Recovery worries still lingered, helping Gold to yet more gains this morning to continue its climb which many analysts tie to the increased buying from investment funds. After reaching 6 month highs yesterday, the yellow metal retreated to US$988/ounce.

Other precious metals fell into the same pattern as Silver cleared the US$16/ounce barrier, while Platinum gave up some of its recent gains to settle at US$1,245/ounce.

Platinum miners were in the lead with Lonmin (LSE: LMI) rallying as much as 9%. Midcap Aquarius Platinum (LSE: AQP) saw its early gains trimmed to 2%.

Gold miners lost some steam, but still posted gains as Randgold Resources (LSE: RRS) added just 1.4% and midcap Peter Hambro Mining (LSE: POG) rose 3%. Yamana Gold (LSE: YAU) climbed 2%, building on yesterday’s strong gains.

FTSE 100 silver producer Fresnillo (LSE: FRES) tacked on a further 3% after a strong session on Thursday. However, midcap Hochschild Mining (LSE: HOC) failed to cash in on higher silver prices, slumping 3.5%.

Specialty platinum firm Johnson Matthey (LSE: JMAT) climbed 1.2%.

A number of junior companies made good progress on Friday.

Uzbekistan focused gold miner Oxus Gold (AIM: OXS) led the pack with a 23% surge. UK and Canadian copper-gold producer Rambler Metals and Mining (TSXV: RAB, AIM: RMM) and Australian gold and copper prospector Solomon Gold (AIM: SOLG) rallied 13% and 12%.

Australian gold producer Leyshon Resources (AIM: LRL), Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM) also performed well, with each adding 8-9%. Africa focused gold deposit developer Cluff Gold (AIM: CLF), Western Australia operating Norseman Gold (AIM: NGL) and gold and copper developer and producer, Frontier Mining (AIM: FML) followed, advancing 6%, 5% and 5.3% respectively.

South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) rallied for the second day in a row.

Turkey focused gold explorer Stratex International (AIM: STI) suffered from profit taking, sliding 6%.

Base metal miners steady as prices fluctuate

Base metals gave some of their gains away on Friday as prices corrected. Copper slid to US$2.82/pound, while Nickel tumbled to US$8.20/pound, but Zinc was steady at US$0.86/pound after reaching US$0.88/pound earlier in the day.

Copper miner Kazakhmys (LSE: KAZ) was the leading gainer in the group, climbing 3.8%. Another copper miner Antofagasta (LSE: ANTO) gave half of its early gains away, closing with small gains.

Rio Tinto (LSE: RIO) and Vedanta Resources (LSE: VED) both improved over 2%, while Anglo-Swiss miner Xstrata (LSE: XTA) and the world’s largest miner BHP Billiton (LSE: BLT) rose over 1%, as did Anglo American (LSE: AAL).

Juniors were headed in different directions in the afternoon following a generally strong start.

Irish zinc producer Connemara Mining (AIM: CON) spiked 35% after saying the first drill hole of the 2009 programme in Limerick produced the best results on the project to date and may indicate a new mineralized zone with higher zinc-lead grades than the discovery it made earlier.

Coking and thermal coal producer New World Resources (LSE: NWR) had its gains erased to finish flat. Tunisia focused metal miner Maghreb Minerals (AIM: MMS) also failed to hold on to its early gain, slipping 3.5%. Swiss-based Ukraine operating iron ore producer Ferrexpo (AIM: FXPO) climbed about 4%, as did Australia focused coking coal producer Caledon Resources (AIM: CDN).

Indonesia operating coal miner Churchill Mining (AIM: CHL) and Botswana operating nickel and copper miner Discovery Metals (AIM: DME) did well, climbing 6.6% and 5.7% respectively.

Copper and nickel explorer Regency Mines (AIM: RGM), South American focused miner Herencia Resources (AIM: HER) and Indonesia operating copper miner Finders Resources (AIM: FND) went against the tide, slipping 7.2%, 5.5% and 4.8% respectively.

Banks, insurance, private equity

Banking stocks took a step back after a strong start as partly nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS), which led the sector in early trade, had their gains trimmed to 1.2% and 0.8% respectively. Sector peer HSBC (LSE: HSBA) performed well with a 2% advance, while Barclays (LSE: BARC) posted marginal gains.

Standard Chartered (LSE: STAN) added 1.3%.

Insurers did slightly better.

Legal & General (LSE: LGEN) climbed 4.6%, while Aviva (LSE: AV) upped its value by 4.2%, as did Prudential (LSE: PRU).

Old Mutual (LSE: OML) rose just 1.6.

Standard Life (LSE: SL) added a little over 1%, but Friends Provident (LSE: FP) finished about 1% below the opening level.

Private Equity group 3i (LSE: III) improved 1.7%.

Large and Mid Cap News

Aberdeen-based oil services group and FTSE 250 constituent Wellstream Holdings (LSE: WSM) announced today it had disposed of its non-core FlexsteelTM business, selling it to Prime Natural Resources in a US$30 million cash-only deal.

Sunridge Gold Corp (TSX-V: SGC) signed a memorandum of understanding to enter into a strategic partnership with an Antofagasta PLC (LSE: ANTO) unit for parts of Sunridge’s Asmara project in Eritrea.

HSBC Holdings PLC (LSE: HSBA) said its Polish unit has agreed to sell its HSBC Credit branded consumer finance portfolio and its credit card portfolio to Alior Bank SA at a premium to the net book value of the receivables at the date of completion. Gross asset value of the portfolios was US$350 million at July 31 2009.

Small Cap News

Staffing software developer Bond International Software (AIM: BDI) entered the public sector, securing a sales deal for its flagship Adapt software, which could earn it up to £5 million over the next six and a half years.

Cancer drug developer Medical Marketing International Group PLC (AIM: MMG) has appointed administrators after it failed to secure further funding or find a suitable acquisition to pursue an alternative line of business.

The Lewis Charles Sofia Property Fund (AIM: LCSS) was forced to clarify its relationship with Lewis Charles Securities (‘LCS’) following a story in the Financial Times surrounding ‘unauthorised’ trading losses at LCS.

Diagnostic testing kits producer Immunodiagnostic Systems Holdings PLC (AIM: IDH) has agreed licence terms with Biosignatures Ltd to use new biomarkers associated with kidney disease identified  through Biosignatures' discovery programme.

Shanta Gold Limited (AIM: SHG) rose in afternoon trade after saying the metallurgical tests suggested that overall recoveries by milling and carbon in leach processing at its Singida project in Tanzania will be over 90%.

VinaCapital  Vietnam Opportunity Fund (AIM: VOF), the AIM listed investment vehicle, announced today that its investee company Pho 24 - a popular Asian fast-food restaurant - has signed a franchise deal to open 30 restaurants in the UK.

Respiratory drug manufacturer Synairgen (AIM: SNG) said it was well financed and resourced to proceed with commercialization of its IFN-beta programme after a successful fundraising in its full year report released today, also reporting broader losses in 2009.

Specialist asset management and advisory firm Sigma Capital Group PLC (AIM: SGM) said it expects first-half results to be significantly ahead of current market expectations, with pretax profit in excess of £1.4 million, up from £0.5 million previously.

Precious and base metals group Landore Resources Ltd (AIM: LND) reported interim results that were in line with company expectations and said it will need to raise additional funds in the fourth quarter of the current year to continue further exploration activities.

Irish zinc explorer Connemara Mining Company PLC (AIM: CON) said the first drill hole of the 2009 programme at the Stonepark project in County Limerick has shown the best results on the project to date and may indicate a new mineralised zone with potentially higher zinc-lead grades than the earlier discovery 1.5 kilometres southeast of it.

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