Overview: as was projected in pre-trade, the FTSE 100 was about 8 points, or 0.15% lower at mid-afternoon after today’s UK manufacturing update failed to offer any positive surprises, showing no change in industrial output from October to November instead of the expected increase as another sign that the country is slow to return to growth after the longest recession on record.
Telecom group BT (LSE: BT) was atop the leaderboard with a 2.5% gain, while investment management firm Schroders (LSE: SDR) and oil and gas engineering firm Petrofac (LSE: PFC) followed, climbing 2%. Other notable risers included pharmaceutical company AstraZeneca (LSE: AZN), software developer Autonomy Corporation (LSE: AU), broadcaster BSkyB (LSE: BSY) and packaging group Rexam (LSE: REX), which all added more than 1%.
Interdealer broker ICAP (LSE: IAP) was at the bottom of the index with a 2% loss. Other notable fallers included commercial property company British Land (LSE: BLND), plumbing and heating equipment manufacturer Wolseley (LSE: WOS), London Stock Exchange Group (LSE: LSE) and tour operator Thomas Cook Group (LSE TCG), which all shed slightly more than 1%.
US stock index futures also were flat in response to the latest news from China with futures for the Dow Jones Industrial Average, the broader S&P 500 index and the NASDAQ composite adding about 0.1%.
Commodities
Crude prices took a dive today after China upped the reserve requirements for banks by 0.5% to 15% of their deposits, further tightening the monetary policy after increasing bank-reserve ratios and interbank rates to curb economic activity and prevent the economy from overheating.
Oil took another hit from yesterday’s update from the American Petroleum Institute (API), which said that oil stocks increased 1.2 million barrels, while distillate inventories rose by 3.6 million barrels and gasoline supplies rose by 6.8 million barrels in the week ending 8 January.
Most oil and gas stocks were in decline today. Supermajors BP (LSE: BP) and Shell (LSE: RDSB) were down 1.2% and 1.5% respectively, while Tullow Oil (LSE: TLW) dropped 1% and Cairn Energy (LSE: CNE) declined marginally.
Another FTSE 100 constituent BG Group (LSE: BG) did better, posting a small gain.
Amec (LSE: AMEC) declined 1.2%, while another service company Petrofac (LSE: PFC) climbed 1.7%.
Midcaps mostly followed the trend. Dana Petroleum (LSE: DNX), Heritage Oil (LSE: HOIL) and Premier Oil (LSE: PMO) shed about 1%, while Salamander Energy (LSE: SMDR) declined marginally and Dragon Oil (LSE: DGO) was flat.
Soco International (LSE: SIA) and Melrose Resources (LSE: MRS) outperformed the sector with gains of 3% and 1.5% respectively, while JKX Oil & Gas (LSE: JKX) rose marginally.
Service companies Wellstream Holdings (LSE: WSM) and Wood Group (LSE: WG) slid 3.5% and 1% respectively.
Juniors Europe focused oil and gas developer Ascent Resources (AIM: AST) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) went against the tide, climbing 4.5% and 3.5% respectively, while fellow small cap Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) moved with the sector, sliding 8%, while North American based explorer Nighthawk Energy (AIM: HAWK) and Irish oil and gas exploration company Petroceltic International (AIM: PCI) declined 3.5%.
Gold, silver and platinum rebound
Gold prices bounced back today following yesterday’s sharp fall with spot gold prices rising slightly to get back above US$1,130/oz after the US Dollar eased against the euro after climbing on China’s yesterday’s monetary policy decisions, which toppled precious metals along with other commodities.
China’s central bank upped the reserve requirements for banks by 0.5% to 15% of their deposits shortly after increasing bank-reserve ratios and interbank rates to curb economic activity and prevent the economy from overheating to cause oil, precious and base metals to slide while the US dollar strengthened.
Gold spot prices fell to US$1,124/oz after reaching above US$1,160/oz. Silver and platinum also improved, rising to US$18.41/oz and US$1,570/oz respectively.
Miners retreated with platinum producer Lonmin (LSE: LMI) leading the way in the FTSE 100 with a 1.6% slide. Gold miner Randgold Resources (LSE: RRS) declined 1.2%, while fellow blue chip silver miner Fresnillo (LSE: FRES) was flat, as was specialty chemicals firm Johnson Matthey (LSE: JMAT).
Midcaps followed with the exception of Aquarius Platinum (LSE: AQP), which posted a small gain. Silver producer Hochschild Mining (LSE: HOC) was at the bottom of the pile with a 2.6% decline, while gold miner Petropavlovsk (LSE: POG) was down 1.5%.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) and Brazil focused gold miner Horizonte Minerals (AIM: HZM) surged 14% to lead the juniors. African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) followed, tacking on nearly 7%.
South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Latin American precious metal miner Minera IRL (AIM: MIRL) rose 5% and 4.5% respectively.
Iran focused gold explorer Persian Gold (AIM: PNG) and South Africa focused emerging platinum producer Platmin (AIM: PPN) headed in the opposite direction, shedding 6% and 4.5% respectively. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) slipped 4%.
Miners climb as copper and nickel rise
Base metals also rose after declining on Tuesday with copper and nickel reaching US$3.34/lb and US$8.02/lb, while zinc improved to US$1.12/lb.
Most mining stocks were on the rise. BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) added nearly 1%, while Anglo American (LSE: AAL), Kazakhmys (LSE: KAZ) and Xstrata (LSE: XTA) rose marginally. Antofagasta (LSE: ANTO), Eurasian Natural Resources (LSE: ENRC) and Vedanta Resources (LSE: VED) were flat.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) shed less than 1%.
Iron ore focused investor Red Rock Resources (AIM: RRR) and Indonesia operating coal miner Churchill Mining (AIM: CHL) did well, adding 3%.
London Mining (AIM: LOND) and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) moved with the sector, declining 5.5% and 5% respectively.
Banks, insurance, private equity
Banking stocks were mixed at mid afternoon. Royal Bank of Scotland (LSE: RBS) was the top performers with a 1.3% gain, while Standard Chartered (LSE: STAN) tacked on less than 1%. Barclays (LSE: BARC) and HSBC (LSE: HSBA) both declined 1.3%, while Lloyds (LSE: LLOY) remained flat.
Admiral Group (LSE: ADM) and RSA Insurance Group (LSE: RSA) were the top performing insurance stocks with gains of 2% and 1.2% respectively. Aviva (LSE: AV) and Legal & General (LSE: LGEN) added less than 1%, while Old Mutual (LSE: OML) and Standard Life (LSE: SL) remained flat and Prudential (LSE: PRU) declined marginally.
Private equity group 3i (LSE: III) posted a small loss.
Large and Mid Cap News
UK high street baker Greggs Plc (LSE: GRG) revealed a strong performance over the four week Christmas trading period, with a 3.1% year-on-year increase in total sales. For the 53 weeks ended 2 January 2010, Greggs increased total sales by 5%, with a 0.8% improvement in like-for-like sales.
Emerging markets focused asset manager Ashmore Group (LSE: ASHM) said net cash inflows and fund performance lead to a US$0.5 billion increase in its total assets under management (AuM) during the quarter ended 31st December 2009. The 2% quarter-on-quarter AuM growth missed analyst expectations and is reduced from the previous quarter’s 25% increase.
A commercial property joint venture between Tesco (LSE: TSCO) and British Land (LSE: BLND), Tesco BL Properties Limited, has secured £315 million in new funding in order to refinance its property portfolio. The new loan facility has been provided by a London based banking syndicate.
Balfour Beatty PLC (LSE: BBY) said it that it has reached financial close for the £450 million Blackburn with Darwen and Bolton Councils Building Schools for the Future (BSF) programme.
In a trading update for the year ended 31 December 2009, SIG plc (LSE: SHI) said it expects full year pretax profit to be no less than £60m, in line with current analyst expectations. The European insulation and construction product supplier has been impacted by a significant reduction in construction activity during the year as challenging market conditions persisted throughout 2009.
Copper miner Kazakhmys (LSE: KAZ) has signed a further facility agreement for US$200 million for potential development of several existing mines to bring the total value of the facilities signed to US$2.3 billion under the US$2.7 billion financing package secured in late December.
Home shopping retailer N Brown Group (LSE: BWNG) revealed a 4.9% year-on-year improvement in total group revenue during the 19 weeks since its half-yearly results. In a trading update for the period ended 9 January 2010, it said it is confident it can deliver a full year performance in line with expectations.
Small Cap News
Exploration company Rusina Mining (AIM: RMLA, ASX: RML) is investigating the possibility of resuming some selective shipments of nickel laterite ore from its Acoje tenement in the Zambales District on the island of Luzon in the Philippines.
Vatukoula Gold Mines (AIM: VGM) announced a summary of the results of an independent assessment of its mineral reserves and mineral resources carried out by AMC Consultants, which it said confirmed the “world class size and scale” of the ore deposit at the Vatukoula mine on Fiji, even though the mineral resources are slightly lower than the previous estimates.
Obtala Resources (AIM: OBT) entered an agreement to acquire Sierra Leone Hard Rock Limited (SLHR) from African Minerals (AIM: AMI) for a 9.9% stake in the company, which equals to £4.26 million.
Herencia Resources (AIM: HER) has engaged Major Drilling to undertake a 3,500 metre diamond drilling programme at the Paguanta zinc-silver-lead-gold project in Chile, which will commence on schedule in February 2010.
UK based coal bed methane (CBM) developer, IGas (AIM: IGAS) said it is on track for full scale gas production in 2011 as its granted planning permission for a full production site at Ellesmere Port. Further planning permissions for four further full production sites in the North West of England have also been submitted. Investors have responded positively to the news, sending the shares up over 5.5%.
Cash machine deployer Cashbox (AIM: CBOX) has announced an 18 month supply contract with London-based brewery Fuller’s, also having increased its estate with existing client the Orchid Group.
GMA Resources (AIM: GMA) has issued 10.66 million shares to raise a total £0.48 million. The shares represent the second of four equal tranches agreed to be subscribed by Sahara Gold, a subsidiary of ASCOM Precious Metals Mining (APM), for the subscription to an aggregate of 42.64 million shares representing a 9% stake in the company.
Italy–resource focused Po Valley Energy (ASX: PVE) has celebrated another key milestone with the maiden production of one million cubic metres of gas in Italy.
China Medical System Holdings (AIM: CMSH) expects its sales for the full year ended 31 December to amount to US$96 million, representing a year-on-year increase of 32% from £73 million in 2008.
Sinclair Pharma (AIM: SPH) informed the market that three of its directors participated in its recent fundraising, increasing their holdings in the company.