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Wall Street open: Dow drops as IBM weighs

Last updated: 14:32 22 Jan 2014 GMT, First published: 15:32 22 Jan 2014 GMT

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US shares painted a mixed picture, with the Dow lower on Wednesday, as International Business Machines (IBM) and its earnings was under the spotlight.

The computer giant's shares fell after it unveiled a 5% drop in sales in the fourth quarter  and senior management have waived their bonuses for the year. 

The systems and technology division reported 17% drop in revenues compared to the same quarter last year.

According to the company, it was  the first time well-established markets like Europe have topped high growth regions like Latin America and Asia.

The benchmark Dow was down 40  points, or 0.23%, to 16,376, while Nasdaq lost five  to stand at 4,231  and the broader based S&P 500 was flat at 1,844.

Also, on a day of several big firms reporting, the handbag maker Coach slumped 7.9% after sales missed analysts’ estimates.

No major economic data is scheduled for Wednesday, after stocks finished yesterday mostly higher.

In the UK, Britain's blue chip index was down around nine points after recent gains  - at 6,826.

Surprisingly good jobs figures have raised the prospect of the Bank of England taking away the punch bowl sooner than anticipated.

The unemployment rate in Britain in the three months to the end of November fell to 7.1% from 7.4% in the preceding three months, leaving it close to the 7% threshold at which the Old Lady of Threadneedle Street has indicated it would consider raising interest rates.

In the latest example of the “good news is bad news” phenomenon, the top-share index saw all of its early gains evaporate. 

Despite the collapse, there are still some good gains among blue-chips, most notably Sage (LON:SGE), the accountancy software firm, which gained 2.9%.

The bookie William Hill (LON:WMH) was the biggest loser - shedding 2.8%

On the small caps front, W Resources’(LON:WRES) was supported by news the concentrate from the new tailings project at la Parrilla in Spain will have a much higher tungsten and tin content than originally forecast.

First production of a tungsten/tin concentrate is expected next month and discussions are underway over sales contracts. All of the planned monthly production of 20-25 tonnes month will be sold to 1-2 customers, it said.

Shares are 11.2% higher at 0.94p.

Impressive though that share price advance is, it pales in comparison with New World Oil & Gas’s (LON:NEW) 36% surge after it revealed it had received the first instalment of the delayed cash injection from cornerstone investor Niel Petroleum.

Niel agreed in September of last year to subscribe for 2.18bn New World shares at 0.735p each in a move that will see it take a 75.66% stake in the AIM-listed explorer, but there was a delay in the transfer of funds.

New World has now received US$4.8mln from Niel and has put the funds in escrow; the remaining US$20.2mln due from Niel is expected to arrive by the end of February.

There were also strong gains for North Sea oil firm Trapoil (LON:TRAP) after it said it is looking at more opportunities to deliver value for shareholders, pointing to the potential for another unconventional oil play in the portfolio.

Last month, the company received more than 4mln IGas Energy (LON:IGAS) shares from Caithness Oil in exchange for Knockinnon, Lybster and other assets.

In the same sector, Leni Gas & Oil (LON:LGO) also recorded gains, rising over 9% after revealing it has received the environmental go-ahead for a 30 well drill programme on the Goudron field in Trinidad.

Drilling operations are now expected to start immediately, the company said.

Sirius Minerals (LON:SXX) also rose 8.77% again Wednesday after rising yesterday after inking a multi-year take-or-pay offtake agreement for production from the York potash project.

It means total polyhalite sales commitments at the UK fertiliser project now stand at 4.8 million tonnes a year.

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