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Gold, Silver and Platinum slide, drag down miners as FTSE 100 struggles to stay on positive ground

18th Sep 2009, 1:18 pm Gold, Silver and Platinum slide, drag down miners as FTSE 100 struggles to stay on positive ground

Overview: the FTSE 100 opened lower after Wall Street closed with a small decline on Thursday. Oil and metal prices also decreased, causing mining and energy stocks to turn negative in early trade.

Later, however, the blue chips balanced out early losses, driving the FTSE 100 above the opening level, albeit not by much as the index stood just a few points higher at midday.

Owner of the B&Q do-it-yourself chain Kingfisher (LSE: KGF) was in the lead, climbing 3% after announcing higher profits and revenues yesterday, which led to increases of the group’s price targets by brokers Bank of America-Merrill Lynch, Deutsche Bank, Citigroup and Societe Generale.

Drugmaker GlaxoSmithKline (LSE: GSK) tacked on 2.1% on reports that it is engaged in talks to acquire a 5% stake in Dr. Reddy’s Laboratories.

Commercial property company Hammerson (LSE: HMSO) also made it to the top three with a gain of over 2%.

Software manufacturer Autonomy Corporation (LSE: AU), clothing retailer Next (LSE: NXT), miner Eurasian Natural Resources (LSE: ENRC) and food manufacturer Unilever (LSE: ULVR) also showed up on the leaderboard with gains of about 2%.

Tullow Oil (LSE: TLW) and specialty chemicals firm Johnson Matthey (LSE: JMAT) emerged as the leading fallers, shedding 3% each. British Airways (LSE: BAY), which led the blue chips yesterday after Goldman Sachs added it to its conviction buy list, gave away a portion of its gains in early trade moving down about 2.5%. Utilities also switched to selling mode with Pennon Group (LSE: PNN) and Severn Trent (LSE: SVT) losing over 1.5%.

Commodities

Oil prices inched lower today as West Texas Intermediate slid to US$72.5/barrel, while Brent Crude was at US$69.8/barrel.

Major oil and gas stocks mostly fell. BP (LSE: BP) opened with marginal losses, while fellow supermajor Shell (LSE: RDSB) tacked on less than 1%. BG Group (LSE: BG) continued declining on profit taking, shedding less than 1%.

Tullow Oil (LSE: TLW) also cooled off as investors were reaping profits from its recent surge, losing over 2%, as did Cairn Energy (LSE: CNE). Another FTSE 100 constituent Petrofac (LSE: PFC) declined marginally.

Heritage Oil (LSE: HOIL) emerged as the leading faller in the sector in the FTSE 250, slipping over 3%. Fellow mid tier Dana petroleum (LSE: DNX) declined marginally, but Dragon Oil (LSE: DGO) outperformed the sector with a 1.8% climb in early trade.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) were among the leading risers among the juniors in early trade, rallying 11% and 10% respectively.

US focused junior Empyrean Energy (AIM: EME) followed with a 5.7% climb. Europe focused oil and gas developer Ascent Resources (AIM: AST) also gained, adding over 4%.

Mining stocks fall as gold, silver decline

Gold failed to hold on to the US$1,020/oz mark, retreating to US$1,013/oz. Other precious metals fell into the same pattern, declining after making strong gains during the week. Silver slid to US$17.19/oz, while Platinum declined to US$1,334/oz.

With the sole exception of blue chip gold producer Randgold Resources (LSE: RRS), which held on to the opening level, all major mining stocks were in decline.

Mid-tier yellow metal producer Peter Hambro Mining (LSE: POG) lost 1.6%. Platinum producer Lonmin (LSEL LMI) shed 2.4%, while FTSE 250 miner Aquarius Platinum (LSE: AQP) declined marginally.

FTSE 100 constituent Fresnillo (LSE: FRES) was down 1%, while fellow silver producer mid tier Hochschild Mining (LSE: HOC) lost 2.5%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 3%.

Fijian focused gold miner Vatukoula Gold Mines (LSE: VGM) and South American focused mineral exploration and development company Minera IRL (LSE: MIRL) rose 5% and 3% respectively.

Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) led the fallers, dipping 9%. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and African focused gold deposit developer Cluff Gold (AIM: CLF) also were in selling mode, shedding 5.6% and 4.4% respectively.

Copper, Nickel edge lower to send miners down

Base metals miners were mixed as prices went in different directions. Copper moved down to US$2.83/pound, while Nickel improved to US$7.78/pound. Zinc slid to US$0.86/pound.

The world’s largest miner BHP Billiton (LSE: BLT) and copper miner Kazakhmys (LSE: KAZ) both declined marginally. Chilean copper miner Antofagasta (LSE: ANTO) and Anglo American (LSE: AAL) shed over 1.5%, but Rio Tinto (LSE: RIO), Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) rose marginally.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) lost 3%.

Shares in Red Rock Resources (AIM: RRR) jumped 14% this morning after Jupiter Mines (ASX: JMS) reported rock chip results from the Oakover Manganese Project in Australia. Copper and nickel explorer Regency Mines (AIM: RGM) also got off to a good start, climbing 7%.

Nickel laterite play Rusina Mining (AIM: RMLA), Tunisian focused metal miner Maghreb Minerals (AIM: MMS) and South American focused junior miner Herencia Resources (AIM: HER) headed in a different direction, dipping 13.5%, 8% and 6.5%.

Banks, insurance, private equity

Financial stocks didn’t show much movement in early trade. HSBC (LSE: HSBA) led the banking groups with a small gain. Barclays (LSE: BARC), Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) all lost around 1%. Standard Chartered (LSE: STAN) declined marginally.

Insurers did slightly better. Legal & General (LSE: LGEN), Old Mutual (LSE: OML) and Standard Life (LSE: SL) managed to post small gains, but Aviva (LSE: AV), Friends Provident (LSE: FP) and Prudential (LSE: PRU) all started in the negative.

JP Morgan Chase (LSE: JPM) added 1%.

Large and Mid Cap News

Military goods manufacturer Chemring (LSE: CHG) said the full year outlook was in line with expectations as revenues in the four months to the end of August rose 40% to £142 million, while the order book expanded to £574 million from £377 million, marking a 28% increase.

UK Based Commercial Property firm British Land Plc (LSE:BLND) has announced that it has entered into a joint venture with the Blackstone Group. The deal will see the Blackstone Group acquire a 50% stake in British Land’s Broadgate Estate situated in the City of London.  British Land suggest that the deal represents a positive move in its strategy to diversify its assets away from large single assets. Shares in British Land have fallen 1% in early trading this morning.

Small Cap News

UK institutional investors have backed emerging nickel producer Rusina Mining's (ASX: RML, AIM: RMLA) plans to develop a nickel-chromite mine in the Philippines, by agreeing to invest A$5.75 million in the company.

Gulf Keystone Petroleum Ltd (AIM: GKP) said drilling at its Shaikan-1 well in the Kurdistan region of northern Iraq will soon enter the final target depth between 3,200 and 3,500 metres, and an independent advisory firm will shortly issue a report on the previously announced oil discoveries in the well between 1,467 and 1,710 metres.

Aurelian Oil & Gas PLC (AIM: AUL) announced further board and management changes following the recent appointments of Rowen Bainbridge as chief executive officer and Mark Reid as chief financial officer.

US focused junior oil and gas group Empyrean Energy (AIM: EME) announced the new operator of its Eagle Oil Pool Development Project in California after R&M Oil and Gas acquired Victoria Petroleum USA.

Shares in Red Rock Resources (AIM: RRR) jumped 20% this morning after Jupiter Mines (ASX: JMS) reported rock chip results from the Oakover Manganese Project in Australia.

Fox-Davies Capital issued a note on Ascent Resources PLC (AIM: AST), saying it is encouraged by the string of successes that the oil and gas exploration and production company has been able to produce.

Songbird Estates (LSE: SBDB) said today it has agreed to purchase over 54 million shares in the capital of Canary Wharf from Frankfurt-headquartered Commerzbank AG in a £112 million deal, increasing its ownership of London’s business and shopping centre to 69.3%.

Argentina-focused Patagonia Gold PLC (AIM: PGD) said its exploration activities are progressing well and it is advancing towards becoming a gold producer as it reported results for the six months to end-June 2009.

San Leon Energy PLC (AIM: SLE) announced that it has conditionally placed 41,866,666 new shares at 15 pence each, raising £6.3 million before expenses  from a number of institutional and other investors.

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