Overview: the FTSE 100 expectedly declined in the morning, shedding 0.6% as financial and commercial stocks switched to selling mode to drag the market down. These losses were in part offset by gains in the mining sector, which was recovering from yesterday’s falls despite further declines in metal prices.
Miner ENRC (LSE: ENRC), Associated British Foods (LSE: ABF) and power generation company International Power (LSE: IPR) led the blue chips with gains of 1.5%. Pharmaceutical company AstraZeneca (LSE: AZN), airline British Airways (LSE: BAY) and retailer Marks & Spencer (LSE: MKS) followed, adding more than 1%.
Property stocks were among the biggest fallers in the index as Hammerson (LSE: HMSO), Liberty International (LSE: LII), British Land (LSE: BLND) and Land Securities Group (LSE: LAND) shed 4%, 3.5%, 2.5% and 2%, respectively.
US stock index futures inched slightly higher in the morning ahead of the crucial government jobs report, which is set to be released in the pre-market. Futures for the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq composite inched slightly higher, pointing to a moderately positive start on Wall Street.
Commodities
Oil prices slid this morning as January Brent Crude declined to US$77.81/barrel and US light, sweet crude for January delivery dropped to US$75.71/barrel.
Major oil and gas stock were mixed. Cairn Energy (LSE: CNE) led the pack with a 1.3% advance. Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) rose marginally, as did BP (LSE: BP), while fellow supermajor Shell (LSE: RDSB) posted a small gain. BG Group (LSE: BG) also declined marginally.
Midcaps also were mixed as while Heritage Oil (LSE: HOIL) declined 1.4%, Dana Petroleum (LSE: DNX) remained flat and Dragon Oil (LSE: DGO) tacked on nearly 1%.
Most juniors were in decline.
Europe focused oil and gas developer Ascent Resources (AIM: AST), EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG), which released an operational update today and Irish oil and gas exploration company Petroceltic International (AIM: PCI) were the biggest fallers among the small caps, shedding 9%, 6% and 5% respectively.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Kazakhstan operating Max Petroleum (LSE: MXP) lost more than 4%.
Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and North America focused oil & gas junior Pantheon Resources (AIM: PANR) went against the tide, tacking on 4% and 3% respectively.
Miners mixed as metals slide
Precious metals inched lower as gold moved down to US$1,205/oz, while silver and platinum slid to US$18.82/oz and US$1,482/oz.
Mining stocks were mixed. Gold miner Randgold Resources (LSE: RRS) rose marginally, while silver miner Fresnillo (LSE: FRES) posted a small loss and platinum mine Lonmin (LSE: LMI) slid 1.5%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) added less than 1%.
Aquarius Platinum (LSE: AQP) was the biggest faller among the midcaps, shedding 2%. Silver producer Hochschild Mining (LSE: HOC) declined marginally and gold miner Petropavlovsk (LSE: POG) added less than 1%.
Brazil focused gold miner Horizonte Minerals (AIM: HZM) led the juniors with a 9.5% climb, while Australian gold and copper prospector Solomon Gold (AIM: SOLG) followed with a 5% advance.
Commodity asset development company Mercator Gold (AIM: MCR) headed in the opposite direction, slipping 10%. Turkey and Ethiopia operating gold miner Stratex International (AIM: STI) and Tajikistan operating gold miner Kryso Resources (AIM: KYS) followed with losses of 6% and 5%, respectively. South American based explorer Mariana Resources (AIM: MARL) slid 4%.
Copper, nickel and zinc retreat
Base metals also were in decline with copper and nickel retreating to US$3.18/lb and US$7.17/lb respectively, while zinc slid to US$1.06/lb.
Base metals focused stocks were mixed. Rio Tinto (LSE: RIO) and Eurasian Natural Resources (LSE: ENRC) were the top performers in the sector, gaining about 1.3%, while Kazakhmys (LSE: KAZ) rose marginally. Antofagasta (LSE: ANTO), BHP Billiton (LSE: BLT), Vedanta Resources (LSE: VED) and Xstrata (LSE: XTA) posted small losses, while Anglo American (LSE: AAL) retreated 1.2%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector, climbing 1.6%.
Specialty minerals exploration and development company Thor Mining (AIM: THR) and laterite nickel specialist European Nickel (AIM: ENK) were in decline, shedding 6% and 4% respectively.
South American focused junior miner Herencia Resources (AIM: HER) was the top performer among the juniors, climbing 14%. South Africa operating chrome miner Chromex Mining (AIM: CHX) and cement operator Prosperity Mineral Holdings (AIM: PMHL) advanced 4.5% and 4%, respectively, while Australia focused coking coal producer Caledon Resources (AIM: CDN) rose 3%.
Banks, insurance, private equity
Financial stocks were in decline today. Standard Chartered (LSE: STAN) led the retreat in the banking sector, sliding 4%, while part-nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) dropped 2.5% and 1.7% respectively. HSBC (LSE: HSBA) and Barclays (LSE: BARC) shed more than 1%.
Insurance stocks also switched to selling mode. Aviva (LSE: AV) and Prudential (LSE: PRU) were at the bottom of the pile with losses of 2.5%. Old Mutual (LSE: OML) shed nearly 2%, while Legal & General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) both pulled back 1.5%. Standard Life (LSE: SL) declined marginally.
Car insurer Admiral Group (LSE: ADM) went against the tide, posting a small gain.
Private equity group 3i (LSE: III) was down 3%.
Small Cap Movers
Other notable movers among the small caps included Machine to machine (M2M) communications specialist Telit Communications (AIM: TCM), which rallied 11%.
Large and Mid Cap News
Pharmaceutical group AstraZeneca (LSE: AZN) announced further progress for its Major Depressive Disorder (MDD) treatment pipeline. The US Food and Drug Administration (FDA) approved the once-daily SEROQUEL XR Tablets as an add-on to supplement antidepressant treatments in adults.
Major international mining group Rio Tinto (LSE, ASX: RIO) cemented its long term research relationship with The University of Queensland with the formation of the Rio Tinto Centre for Advanced Mineral Sorting. The research facility will be located at the Julius Kruttschnitt Mineral Research Centre in Brisbane, Australia.
Natural resources focused engineering consultants AMEC (LSE: AMEC) revealed its strategic goals and outlook for the next five years, including doubling EPS in the period. The 'Vision 2015' development programme is said to reflect a ‘shift in focus’ towards assured growth. In the more immediate future, AMEC said it remains firmly on track to deliver on its margin target of 8.5% in 2010 following "another year of improved performance".
FTSE250 resource company Ferrexpo (LSE: FXPO) has secured a new Pre-Export Financing (PXF) facility of up to US$230 million. The facility is being provided by a banking syndicate coordinated by Deutsche Bank (FWB: DBK) and also including several other major institutions such as JP Morgan (NYSE: JPM), UBS (NYSE: UBS), BNP Paribas and Fortis Bank (Euronext Paris: BNP).
Lonmin PLC (LSE: LMI) announced it has completed wage negotiations with the National Union of Mine Workers in respect of its Marikana operations. The operation is situated on the Western Limb of South Africa’s Bushveld Complex and contributes around 92% of Lonmin’s annual platinum group metals production with 10.2 million tonnes in the last year.
In the iconic 1987 film Wall Street, stock broker Bud Fox once remarked to the ruthless Gordon Gekko that Blue-Star Airlines was one of his best buys. Gekko immediately replied to Fox's sales pitch that airlines made lousy investments because of high fixed costs, volatile fuel prices and problematic unions. Looking at British Airways (LSE, BAY), Gekko has more than a point.
Small Cap News
Finders Resources (ASX: FND) will commence the first pass drill testing of high grade vein targets indicated by surface channel sampling at Ojolali Gold-Silver Project, following the arrival of a man-portable diamond drill.
Europe focused oil and gas developer Ascent Resources (AIM: AST) said production testing on the PEN-105 well on its Nyrsieg South permit in Hungary initially flowed at over 78,000 cu m (cubic metres), or 2.75 mmscfd (million standard cubic feet per day) of gas per day.
Edison Investment Research (“EIR”) has issued a note on IdaTech (AIM: IDA), saying it believes continued reduction of costs and competing on price with incumbent technology is key for the fuel cell maker's products to reach commercialisation.
Zimbabwe focused investment company LonZim (AIM: LZM) has raised £1.17 million via a placing of 4.25 million shares representing 12% of the company’s enlarged capital as economic growth in Zimbabwe seems to be taking shape.
University commercialisation company Fusion IP (AIM: FIP) said one of its portfolio companies, Morvus Technology Ltd, raised £2.15 million. The oncology focused pharmaceutical company intends to use the proceeds to progress its main drug development programs. In a separate agreement Morvus agreed a deal with Edinburgh-based NuCana BioMed Ltd, which will fund the clinical and commercial development of its ProTide technology.
Lonrho (LSE: LONR) has raised £16.025 million via a placing of 160.25 million shares to provide capital for its businesses and increase its equity stake in its core established businesses, particularly the agricultural and building divisions.
Altus Resource Capital Ltd (LSE: ARCL) announced plans to raise further capital this month to capitalise on its success as reported its net asset value (NAV) has risen 38.6% to 131.7 pence per share as at November 30 since the IPO in late June this year.
Wave power generator specialist Ocean Power Technologies Inc (AIM: OPT, NASDAQ: OPTT) has selected privately owned Oregon Iron Works to begin the construction phase of its commercial wave energy PowerBuoy system. The buoys will form a 1.5 megawatt wave-power project 2.5 miles offshore Oregon.
Evolution Securities took note of the third quarter report released by African Aura Mining Inc (AIM: AAAM; TSX-V: AAZ) early this week, saying it did not reflect the significant changes that are underway within the group and reiterating its “conservative” target price, which is almost three times greater than the stock’s current value of 53.5 pence per share.
Mediterranean Oil & Gas (AIM: MOG) said its key projects in Italy made progress and reached new milestones, expecting to update the certification of the oil reserves at Ombrina Mare in early 2010 and secure a production concession for the Guendalina gas field by year-end.