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FTSE 100 retreats as US jobless claims rise, banks, miners and energy stocks slip

Last updated: 20:14 17 Dec 2009 GMT, First published: 21:14 17 Dec 2009 GMT

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Overview: the FTSE 100 slipped 1.6% today as the US stock market was off to a negative start following a disappointing update from the Labor Department, which showed a surprising increase in initial jobless claims of 7,000 to 480,000 in the previous week, while a decline to 450,000-470,000 was expected.

The main stock market indices slipped into the negative early on. The Dow Jones Industrial Average was down 0.9%, the broader S&P 500 index slid 0.8% and the technology heavy NASDAQ composite retreated 1%.

Pest control giant Rentokil (LSE: RTO) and engineering company Invensys (LSE: ISYS) emerged atop the leaderboard with gains of 2.3% and 1% respectively. Security services group G4S (LSE: GFS), credit information group Experian (LSE: EXPN), investor Resolution (LSE: RSL), chocolatier Cadbury (LSE: CBRY) and publisher Reed Elsevier (LSE: REL) were the only other FTSE 100 constituents so stay in the black , posting small gains.

Banks Lloyds (LSE: LLOY) and Barclays (LSE: BARC) led the retreat with losses of 6.5% and 5%, respectively. Other notable fallers included Home Retail Group (LSE: HOME), caterer Compass Group (LSE: CPG) and another retailer Kingfisher (LSE: KGF), which dropped 4.5%, 4% and 3.5% respectively.

Commodities

Oil prices retreated today after making gains overnight. February Brent Crude was down to US$73.68/barrel, while US light, sweet crude slid to US$72.46/barrel.

All major oil and gas stocks were in decline today. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) posted marginal losses, while Heritage Oil (LSE: HOIL) and Tullow Oil (LSE: TLW) shed about 1%. Petrofac (LSE: PFC) was down 1.4%, while BG Group (LSE: BG) and Cairn Energy (LSE: CNE) retreated 1.8%.

Midcaps were mixed as while Dana Petroleum (LSE: DNX) and Heritage Oil (LSE: HOIL) lost 1.7% and 1%, while Dragon Oil (LSE: DGO) advanced 1%.

Some small caps companies were able to post good gains today in spite of the general decline in the sector. Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) was among the top performers with an 8% advance. North America focused oil & gas junior Pantheon Resources (AIM: PANR) and Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) followed with gains of about 5.5%, while North Sea explorers Xcite Energy (AIM: XEL) advanced 4.5%.

Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) moved in the opposite direction with a 4% loss. US focused junior Empyrean Energy (AIM: EME) and Irish oil and gas exploration company Petroceltic International (AIM: PCI) both slid 3.5%.

Gold, silver and platinum slide to weaken miners

Precious metals were in decline today as gold moved down to US$1,116/oz, while silver and platinum retreated to US$17.37/oz and US$1,438/oz respectively.

All major mining stocks were in retreat today. Platinum miner Lonmin (LSE: LMI) was at the bottom of the pile with a 2.6% loss, while fellow FTSE 100 constituents silver miner Frenillo (LSE: FRES) and gold producer Randgold Resources (LSE: RRS) were down 1.1% and 1.6%, respectively.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) lost 1.5%.

Midcaps followed. Aquarius Platinum (LSE: AQP) slipped 2.2%, gold producer Petropavlovsk (LSE: POG) pulled back 1.5%, while another FTSE 250 constituent silver producer Hochschild Mining (LSE: HOC) declined marginally.

South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) led the small caps, advancing 13%. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD), Tajikistan operating gold miner Kryso Resources (AIM: KYS) and commodity asset development company Mercator Gold (AIM: MCR) also did well, gaining 6%.

Copper and gold miner EMED Mining (AIM: EMED), which today said that the Andalucía government confirmed the permitting process for the restart of its Rio Tinto copper mine, slid 6.7%. South American based explorer Mariana Resources (AIM: MARL) and Africa focused gold deposit developer Cluff Gold (AIM: CLF) lost 5.7% and 4%, respectively.

Copper and nickel slide

Base metals also retreated as copper and nickel slid to US$3.11/lb and US$7.50/lb and zinc pulled back to US$1.06/lb.

Xstrata (LSE: XTA) was at the bottom of the pile, sliding 5%. Antofagasta (LSE: ANTO) and Eurasian Natural resources (LSE: ENRC) shed 4% and 3%, respectively. Kazakhmys (LSE: KAZ) and Anglo American (LSE: AAL) slid 2.5%, Vedanta Resources (LSE: VED) lost 2%. BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) lost about 1.5%.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector with a 1% advance.

South American focused junior miner Herencia Resources (AIM: HER) led the small caps in the sector, climbing 12.5%. Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) followed with a 5% advance.

Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) went in the opposite direction, sliding 13%. Tunisia focused metal miner Maghreb Minerals (AIM: MMS) and Laterite nickel specialist European Nickel (AIM: ENK) declined 6% and 4.3%, respectively.

Banks, insurance, private equity

Financial stocks were in decline today. Part-nationalised bank Lloyds (LSE: LLOY) was the heaviest faller among the banking stocks, tumbling 7.2%. Barclays (LSE: BARC) followed with a 5.6% retreat, while HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) both declined 3%. Another bailed out bank Royal Bank of Scotland (LSE: RBS) slid 2.5%.

Insurance stocks also switched to selling mode. Legal & General (LSE: LGEN) emerged as the heaviest faller with a 3.5% loss, while Aviva (LSE: AV) came close with a 3.2% decline. Prudential (LSE: PRU) and Standard Life (LSE: SL) were down 2.5%, Old Mutual (LSE: OML) slid 2%. RSA Insurance Group (LSE: RSA) lost 1.6%, while Admiral Group (LSE: ADM) did relatively well with only a marginal loss.

Private equity group 3i (LSE: III) lost 2.4%.

Small Cap Movers

Other notable movers among the small caps included IP commercialisation company Amphion Innovations (AIM: AMP) with a gain of nearly 8%.

Large and Mid Cap News

Oil and gas producer Melrose Resources plc (LSE: MRS) increased its production outlook for next year, with a 4% increase in daily production from 2009’s guidance. The FTSE250 constituent expects to produce 40 thousand barrels of oil equivalent per day (Mboepd). The company intends to utilize the resulting increase in cash-flows to advance its development projects. In 2010, Melrose is planning an active exploration and development work programme with capital expenditures of approximately US$169 million.

In a pre-close statement ahead of full year results for the year ended 31 March 2009, oil and gas services company Wood Group (LSE: WG.) said its robust performance had continued and it anticipates full year results will be in line with market expectations. According to the statement the group’s financial position remains strong and it expects to deliver good operating cash flow for the year.

UK pub group, Mitchells and Butlers (LSE: MAB) clarified its position this morning regarding a recent dispute with its largest shareholder, Piedmont, on the composition of the board of the directors.

In today’s pre-close statement UK builders' merchant Travis Perkin’s (LSE: TPK) said its retail business has enjoyed a steady revival and recent trends show the merchant market has stabilised. According to Travis Perkins it trading performance is a little ahead of expectations due to the recent upturn.

Small Cap News

Colored gemstone producer, Gemfields (AIM: GEM) confirmed this morning that QVT Financial had upped its stake in the company to just over 38 million shares, or 11.73%.  QVT acquired a further 12.5 million shares, taking its equity holding to 25.26 million shares and also has contracts for difference (CFD’s) over a further 12.74 million shares.

PetroLatina Energy (AIM: PELE) has added two more successful wells on its Los Angeles field in Colombia to achieve a 100% success rate in what it said was the busiest year for development and exploration activity in the company’s history, bringing the total number of wells drilled this year to eight and taking its net production to 1,004 bopd (barrels of oil per day), more than three times the average for the previous year.

Abcam PLC (AIM: ABC), the bioscience company that markets antibodies via its own online catalogue, said trading since the AGM at the beginning of November has been very good, and brings to a close what is expected to be a successful first six months of the financial year across the business.

Sinclair Pharma PLC (AIM: SPH) said it was notified this week that UK hedge fund manager Lansdowne Partners Ltd has increased its holding in the group from below 5 percent to 14.6 percent in the latest fundraising. It now controls 23,524,889 Sinclair Pharma shares.

Shares in Supercart PLC (AIM: SC), specialised in the design, marketing and distribution of plastic shopping trolleys and baskets, plummeted as investors were spooked by the poor sales figures in Europe and news of order deferrals in the US which were flagged in the group’s trading update.

Shares in Advanced Medical Solutions Group PLC (AIM: AMS) were lifted by the medical technology company’s announcement it has had a strong second half of the year and that it expects full year earnings to be in line with market  expectations.

Petroceltic International (AIM: PCI) took its participating interest in permit B.R268.RG covering the Elsa discovery offshore Italy from 40% to 70% and assumed operatorship of the project after reaching a farm-out deal with Cygam Energy’s (TSX-V: CYG) wholly owned subsidiary Vega Oil S.p.A., which will retain a 30% interest.

Shares in Turkey-focused gold explorer and developer Ariana Resources PLC (AIM: AAU) rose after the group reported further solid progress towards production on its proposed joint venture with Proccea Construction Co on the Red Rabbit gold project in western Turkey.

Kalahari Minerals (AIM: KAH) is set to make an all share takeover bid for Australian incorporated unlisted company Coronet Resources Limited, whose principal asset is a 7.65% stake in Kalahari, which could then either be placed or cancelled to boost the NAV (net asset value) per share.

Shares in Gulf of Mexico and Middle East focused oil and gas explorer and producer, Gulfsands Petroleum (AIM: GPX) were in demand this morning after the company reported an that its KHE-13 well in Syria has intersected a 29 metre (net) oil column and flowed oil.

Pan Andean Resources (AIM: PRE), which is preparing to sell its Colombian and Peruvian assets to Petrominerales, reported on its interim results today, posting its first loss in a decade as US gas prices declined dramatically to take a heavy toll on the performance on its cash generating US assets.

EMED Mining Public Ltd (AIM: EMED) said the government of the Andalucia province in Spain has now formally confirmed the permitting process, or roadmap, to facilitate the start-up of the Rio Tinto copper mine.

Vatukoula Gold Mines (LSE: VGM) said its flagship project Vatukoula gold mine delivered the expected improvements in production and cash costs per ounce after the group’s investments in underground development, mining equipment and the power generating facility had a bigger than expected impact on operations in the previous two months.

Marketing software specialist smartFOCUS Group PLC (AIM: STF) said it signed a partnership agreement with Initiatives & Developments (Group ID), under which the French group will integrate, operate, and resell the full smartFOCUS Intelligent Marketing software suite as part of its loyalty management product to its European customers and prospects.

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