Overview: the FTSE 100 expectedly started the day in the black, making a small gain of 0.2% as airline British Airways (LSE: BAY), high in demand after reporting a record quarterly loss, while saying traffic volumes and yields stabilised, and partly nationalised bank Royal Bank of Scotland (LSE: RBS), performed strongly, climbing 7% and 5.5% respectively.
Hedge fund manager Man Group (LSE: EMG) also did well, tacking on 3% after its half year profits beat market expectations. Commercial property company Segro (LSE: SGRO), which sold Great Western Industrial park for £110 million, rose 2.5%, while sector peers Hammerson (LSE: HMSO) and Land Securities Group (LSE: LAND) both added over 2% in sympathy.
Pest control giant Rentokil (LSE: RTO) was the heaviest faller in the FTSE 100 despite reporting a 3.6% increase in quarterly revenues to £623 million, while pre-tax profits doubled. Private equity group 3i (LSE: III) was a distant second with a 2% loss.
No other FTSE 100 constituent lost 2% or more.
Stock index futures in the US rose, pointing to a higher start following yesterday’s rally ahead of the non-farm payrolls report, which is due to come out today.
Oil prices were slightly down from the morning levels. December Brent Crude declined to US$78.03/barrel, while US light, sweet crude for December delivery slid to US$79.59/barrel.
Oil and gas stocks were mixed. Cairn Energy (LSE: CNE) and Petrofac (LSE: PFC) managed to tack on small gains, while fellow FTSE 100 constituent BG Group (LSE: BG) lost 1%, as did BP (LSE: BP). Another supermajor Shell LSE: RDSB) posted a loss of less than 1%, while Tullow Oil (LSE: TLW) declined marginally.
Midcaps did better as Dana Petroleum (LSE: DNX) climbed 1.2%, while Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) rose marginally.
Juniors didn’t show much movement. Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) climbed 4%, while North America focused oil & gas junior Pantheon Resources (AIM: PANR) followed with a gain of over 3.5%.
Europe focused oil and gas developer Ascent Resources (AIM: AST), Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) and North American based explorer Nighthawk Energy (AIM: HAWK) all added 3%.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) went in the opposite direction, shedding 5.6%.
Miners hold steady as gold and silver inch higher
Precious metals were on the rise with gold climbing to US$1,093/oz and silver reaching US$17.51/oz. Platinum was at US$1,359/oz.
FTSE 100 miners weren’t much changed from the opening levels. While gold miner Randgold Resources (LSE: RRS) and platinum producer Lonmin (LSE: LMI) posted marginal gains, silver miner Fresnillo (LSE: FRES) inched slightly lower.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) also rose marginally.
Midcaps showed more volatility. Gold miner Petropavlovsk (LSE: POG) was in the lead with a gain of 2.8%. Aquarius Platinum (LSE: AQP) tacked on 1%, while silver producer Hochschild Mining (LSE: HOC) slid almost 1%.
Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) was among the top performers in the sector with a gain of over 5%.
Australian gold and copper prospector Solomon Gold (AIM: SOLG) was in decline, shedding over 5%, while Fiji focused gold miner Vatukoula Gold Mines (AIM: VGM) and South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) both lost 3%.
Copper and nickel rise
Base metals also rose. Copper and nickel inched higher to US$2.97/lb and US$8.21/lb respectively, while zinc was just short of US$1/lb.
The increases in metal prices buoyed mining stocks. Antofagasta (LSE: ANTO) was in the lead with a 1.5% climb. Anglo American (LSE: AAL) and Eurasian Natural Resources (LSE: ENRC) followed with gains of 1%.
Kazakhmys (LSE: KAZ), Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) rose marginally, as did Rio Tinto (LSE: RIO).
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector with a 2% gain.
Copper and nickel explorer Regency Mines (AIM: RGM), which launched a joint venture with Direct Nickel today, rallied 17% to emerge among the leading risers in the market. Zinc mining and recycling specialist ZincOX (AIM: ZOX) advanced 10%.
Uranium and copper explorer Kalahari Minerals (AIM: KAH), Australia focused coking coal producer Caledon Resources (AIM: CDN) and Botswana operating nickel and copper miner Discovery Metals (AIM: DME) all rose more than 3%.
Iron ore focused investor Red Rock Resources (AIM: RRR), South American focused junior miner Herencia Resources (AIM: HER) and nickel and iron ore exploration junior Landore Resources (AIM: LND) were in selling mode, retreating 5.5%, 4.5% and 3.5% respectively.
Banks, insurance, private equity
Partly nationalised bank Royal Bank of Scotland (LSE: RBS) led the pack with a 5.5% rally, while Lloyds (LSE: LLOY) and Standard Chartered (LSE: STAN) added 2%. Barclays (LSE: BARC) climbed 2.6% and HSBC (LSE: HSBA) was up 1.6%.
Insurance companies were mixed. Prudential and Legal & General (LSE: LGEN) did well, gaining 1.5% and 1.3% respectively. Aviva (LSE: AV) and RSA Insurance Group (LSE: RSA) also were in the positive, making small gains.
Car insurer Admiral Group (LSE: ADM) was in decline, moving down 1.6%, while Old Mutual (LSE: OML) dropped 1%. Standard Life (LSE: SL) posted marginal losses.
Private equity group 3i (LSE: III) declined 2%.
Small Cap Movers
Other notable movers among the small caps included specialty pharmaceutical company Alliance Pharma (AIM: APH), which rose 6% and African Diamonds (AIM: AFD) with a 16% rally.
Large and Mid Cap News
Commercial real estate firm, SEGRO (LSE: SGRO) announced the sale of its Great Western Industrial Park in Southall, London for a total consideration of £110.4m. The deal with the Universities Superannuation Scheme Ltd (USS) represents a net initial yield of approximately 7% and also values the property at a 10% discount from the most recent book valuation which was calculated in June.
This morning’s interim results from British Airways (LSE: BAY)(‘BA’) made pretty grim reading. The FTSE 100 constituent reported operating losses of £292 million following a 13.7% reduction in group revenues during the first six months to September 30, 2009.
Medical technology company Smith & Nephew (LSE: SN, NYSE: SNN) announced their third quarter results for the current financial year. The results for the period showed a ‘strong performance’, with a 22% increase in underlying profit and improving trading margins. According to Smith and Nephew, market conditions remain challenging but they are seeing early signs of stabilisation.
Tate & Lyle (LSE: TATE) released their latest half-yearly report this morning in which it revealed it had increased sales by 7% during the period and reduced its net debt by 20% since March. The results are ‘slightly ahead of expectations’ and the group is said to be encouraged by the progress in the six months to 30th September.
Pest control and cleaning specialist Rentokil Initial (LSE: RTO) said its Q3 pre-tax profits more than doubled to £49.7 million as operations improved and the euro strengthened against the pound, helping the group to a 3.6% increase in revenues, which would be a 3.2% slide at constant exchange rates.
The Royal Bank of Scotland Group (LSE: RBS) reported a third quarter operating loss of £1.52 billion this morning, thanks to yet more impairments and write-downs, which totalled £3.2bn in the quarter. The loss represents an improvement from the second quarter of 2009 in which RBS lost £3.5bn.
FTSE 250 Oil and Gas company Melrose Resources plc (LSE: MRS) provided investors with an operational update on its activities in Bulgaria, Romania and Egypt. The update highlights a series of government approvals in Eastern Europe and the progression of development work in Egypt. Investors appear to have welcomed the update – shares in the mid-tier oil and gas company rose almost 3% this morning on the London Stock Exchange (‘LSE’).
Small Cap News
Seeing Machines Ltd (AIM: SEE), a developer of non-contact head and eye tracking systems, announced that James Fulton Muir has stepped down as chairman and will continue to serve as a non-executive director. Non-executive director William Mobbs, has been elected as Muir’s successor with immediate effect.
Iron ore and coal developer and miner London Mining (AIM: LOND) has been admitted to the Alternative Investment Market (‘AIM’) of the London Stock Exchange (‘LSE’) today and will start trading today.
Queensland gold miner Allied Gold (ASX:ALD; AIM:AGLD) has received conditional approval from the Toronto Stock Exchange (“TSX”) for the listing of its ordinary shares on the TSX.
Fox-Davies Capital has increased its price target for Ascent Resources PLC (AIM: AST) to 20 pence the previous 11p, after “having carried out a critical review of the assets and a revised valuation”. It is maintaining its ‘buy’ stance on the Europe-focused Oil and gas exploration and production company.
Stockbroker WH Ireland (AIM: WHI) has halved its stake in its Australian subsidiary, which lost more than A$0.5 million in the first half.
Westminster Group PLC (AIM: WSG) said it won a contract extension valued at US$2.72 million from the Government of Southern Sudan (GOSS) for additional security at Juba International Airport, Southern Sudan.
Copper and nickel explorer Regency Mines (AIM: RGM) has launched a joint venture (JV) with Sydney based Direct Nickel (DNi) to pilot and apply DNi’s advanced nickel/cobalt leaching technology at Regency’s Mambare lateritic nickel deposit in Papua New Guinea.
Shares in Gladstone PLC (LSE: GLD) rose more than 18 percent to 29.5 pence by midday in London trade after the software group announced has received approaches from third parties regarding a possible offer for the company.