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FTSE 100 advances after Dow Jones, S&P 500 and NASDAQ rally, Asian stocks rise

Published: 01:07 12 Jun 2010 AEST

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Overview: the FTSE 100 added nearly 1% today on top of Thursday’s gain of 0.9% to come closer to 5,200 as oil and gas supermajor BP (LON:BP) recovered after taking a beating yesterday, rallying 8%. Mixed data came out of the US today with the University of Michigan consumer confidence index rising to 75.5, which is a two year high, while retail sales declined 1.2%.

BP was the top performing blue chip. Telecom company Cable & Wireless (LON:CW) followed with a 3% gain, London Stock Exchange Group (LON:LSE) added 2.7% and BT (LON:BT.A) climbed 2.5%. Publisher Reed Elsevier (LON:REL) and pharmaceutical company GlaxoSmithKline (LON:GSK) added just over 2%.

Temporary power provider Aggreko (LON:AGK) was at the bottom of the index with a 3.3% loss. Lloyds (LON:LLOY) followed with a 2.5% decline. Other notable fallers included engineering group Invensys (LON:ISYS) and software developer Sage Group (LON:SGE), which shed nearly 2%.

US stocks expectedly opened with small losses. The Dow Jones Industrial Average was down 0.3% and the broader S&P 500 index declined 0.1%. and the technology heavy NASDAQ composite did better, rising 0.6%.

Commodities

Oil prices slipped today after China’s National Bureau of Statistics said that the growth of the country’s industrial output slowed from 17.8% in April to 16.5% in May to weaken the outlook for the Chinese crude demand. China is the world’s second largest energy consumer behind the US. This came just a day after China said that its exports soared by nearly 50% in May, lifting crude and base metals.

The demand outlook was further strengthened by yesterday’s rally in US markets, which saw the Dow Jones and S&P 500 indexes add nearly 3%. Crude prices have recently been moving in tandem with stock markets as changes in share prices give investors clues about the strength of the ongoing recovery and thus about the outlook for oil demand.

July Brent Crude slid to US$75.49/barrel, while US light, sweet crude declined to US$74.84/barrel.

Oil and gas supermajor BP (LON:BP) surged 8% to recover from yesterday’s falls on Obama’s comments about blocking the company’s dividend payments to shareholders. Fellow energy heavyweight Shell (LON:RDSB) added less than 1%, as did BG Group (LON:BG) and Cairn Energy (LON:CNE). Tullow Oil (LON:TLW) performed better, rising 1.1%.

Amec (LON:AMEC) lost 1.7%, while another oil and gas engineering firm Petrofac (LON:PFC) posted a marginal loss.

Midcaps were mixed. Dragon Oil (LON:DGO) was in decline, slipping 6.7%. JKX Oil & Gas (LON:JKX) and Premier Oil (LON:PMO) shed less than 1%. Heritage Oil (LON:HOIL) posted small gains, while Dana Petroleum (LON:DNX) and Soco International (LON:SIA) climbed 1% and Salamander Energy (LON:SMDR) advanced 2.9%. Melrose Resources (LON:MRS) was in the lead with a 4.5% surge.

Wood Group (LON:WG) was flat, while Wellstream Holdings (LON:WSM) tacke don less than 1%.

Junior companies didn’t show much movement today.

Gold rallies to $1,227

Despite yesterday’s rally in global stock markets, which continued today, gold picked up the steam and nearly reached US$1,230/oz as the European debt crisis continued worrying investors to keep the safe-haven demand at a high level.

Gold improved to US$1,227/oz by late afternoon. Silver and platinum followed, rising to US$18.35/oz and US$1,545/oz respectively.

Most mining stocks were in decline. Platinum miner Lonmin (LON:LMI) was at the bottom of the pile with a 2.5% drop. Silver producer Fresnillo (LON:FRES) declined 2.4%, while Randgold Resources (LON:RRS) posted a marginal loss.

Specialty chemicals firm Johnson Matthey (LON:JMAT) slid 1.2%.

Aquarius Platinum (LON:AQP) retreated 3.3%, gold miner Petropavlovsk (LON:POG) was flat, while silver producer Hochschild Mining (LON:HOC) outperformed the sector, gaining nearly 1%.

Africa operating gold miner GMA Resources (LON:GMA), Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Western Australia operating Norseman Gold (AIM: NGL) were in demand today, rising 14%, 10% and 6.7% respectively.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEFI) heade din the opposite direction, slipping 8%.

Miners decline despite stronger metal prices

Base metals moved higher today. Copper and nickel advanced to US$2.90/lb and US$8.67/lb, while zinc rose to US$0.76/lb.

Base metal miners declined. Antofagasta (LON:ANTO) and Rio Tinto (LON:RIO) retreated 2.3% and 2.1% respectively. Anglo American (LON:AAL) dropped 1.8%. BHP Billiton (LON:BLT), Eurasian Natural Resources (LON:ENRC), Kazakhmys (LON:KAZ), Vedanta Resources (LON:VED) and Xstrata (LON:XTA) lost less than 1%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, posting a small loss.

Copper and nickel explorer Regency Mines (AIM: RGM) and Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) moved along, shedding 7% and 5.5% respectively.

South American focused junior miner Herencia Resources (AIM: HER) did better, surging 7%.

Banks, insurance, private equity

Lloyds (LON:LLOY) and Standard Chartered (LON:STAN) declined 2.5%, while Royal Bank of Scotland (LON:RBS) moved down 1.3%. Barclays (LON:BARC) posted a marginal loss, while HSBC (LON:HSBA) was flat.

Old Mutual (LON:OML) and Prudential (LON:PRU) slid to the bottom of the insurance sector with losses of 2%. Standard Life (LON:SL) posted a marginal loss.

RSA Insurance Group (LON:RSA) was the best performing insurer, rising 1.7%. Admiral Group (LON:ADM) was unmoved, while Aviva (LON:AV) and Legal & General (LON:LGEN) added less than 1%.
Private equity 3i (LON:III) were flat.

Small Cap Movers

Other notable movers among the small caps included African focussed soft commodity specialist, Agriterra Limited (AIM: AGTA) with a 8% loss, speciality biopharmaceutical company Lipoxen (LON:LPX) and novel pesticides and plant nutritional products developer Plant Impact (AIM: PIM), which both added 5%.

Large and Mid Cap News

Greene King PLC (LON:GNK) announced an agreement to acquire four pub restaurants from Punch Taverns PLC (LON:PUB) for £5.3 in cash, financed from the funds raised by the company's recent rights issue, the deal is expected to complete on 8 July 2010.

Dragon Oil (LON:DGO) has reported the completion and initial testing of the Dzheitune (Lam) B/145 development well in the Cheleken Contract Area, in the Caspian Sea off-shore Turkmenistan. It is the second well to be drilled from the new Dzheitune (Lam) B platform. It was drilled to a depth of 3,344 metres and it tested at an initial rate of 1,054 bopd (barrels of oil per day).

In a letter to its shareholders, BHP Billiton (LON:BLT, ASX:BHP) called for Australia’s proposed super-tax to be abandoned, due to the proposal’s "fundamental failings". According to BHP chairman Jac Nasser, the current proposal requires a substantive re-design and, like with Australia’s previous major tax reforms, the Australian government should consult the mining industry "to find a solution in Australia's best interests".

Hammerson (LON:HMSO) has acquired a long leasehold interest in the Leadenhall Court office building in the City of London  from Alan Bloom and Alan Hudson of Ernst & Young (NYSE:EY) for £65 million.

Small Cap News

Red Rock Resources (LON:RRR) 25.1% owned Jupiter Mines (ASX:JMS) has nearly completed its acquisition of a 49.9% stake in the world-class Tshipi Kalahari Manganese Project in South Africa from a group of investors including Pallinghurst Resources Limited and Investec, and will commence drilling at its Oakover Manganese project this month.

China Biodiesel International Holding Co Ltd (LON:CBI) has said that the performance of its share price has been a source of frustration for its directors and it would now cancel the admission of its shares to the AIM market of the London Stock Exchange, also intending to buy back its shares.

The Niche Group (LON:NGP) is already seeing progress from its first investment in the oil and gas sector, as Oman Resources (OR) and its partners extend exploration efforts around their major onshore gas discovery in the Tuz Golu basin, Turkey.

Daniel Stewart & Company (DS&C) said the risk that has pressured shares in Planet Payment (LON:PPT) has now been negated due to regulatory changes and this has not yet been reflected in the market value, which has a significant upside, further boosted by a strong performance in the first two quarters.

African Consolidated Resources (LON:AFCR) (ACR) said it signed a joint venture deal for its recently acquired Nkombwa Hill project with privately-held Rare Earth International (REI) and reported the start of an in-house work programme.

Origo Partners (LON:OPP) is set to raise US$30 million via a share placing, adding to existing cash resources to fund “new and well-advanced” investments opportunities in the Chinese clean-tech and agriculture sectors and in the Mongolian natural resources sector.

Shares in one of the UK’s largest non-life insurers, Brit Insurance Holdings (LON:BRE) surged nearly 20% after the company confirmed speculation that it had received an indicative, £10 per share, approach for the company from Apollo Global Management – a JV between the Apollo Group and the Carlyle private equity group.

With the FIFA World Cup kicking off today, with 64 matches being played over four weeks, eServGlobal Ltd (LON:ESG, ASX:ESV) has rolled-out its FlexiContent Services in South Africa, to keep soccer fans up to date with ‘live-scores’ and updates.

Quadnetics Group (LON:QDG) told investors that trading in the second six months of its extended financial year has been much stronger than in the first six months. The company has changed its year-end from 31May to 30 November, and therefore the financial year will encompass an 18-month period.

Petro Matad (LON:MATD) has restarted operations at its Davsan Tolgoi prospect in Block XX, in Mongolia's Dornod Aimag Province, after the foot-and-mouth enforced restrictions were lifted. On 1 June, the company had to suspend operation, as the governor of Dornod Aimag imposed blanket vehicle and personnel movement restrictions in and out of the area.

Baobab Resources (LON:BAO) has intersected significant widths of magnetite-ilmenite mineralisation at its on-going scout drilling campaign at the Tete iron-vanadium-titanium project in Mozambique. The company released the latest drill results from three holes  - TDH0024, 26 and 27, each with multiple significant intercepts with widths ranging from 12m to 26.5m, grades reached up to 62.8% Fe and 0.69% V2O5.

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