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Other Articles:	11-08-201006-08-201005-08-2010

Wall Street drags down FTSE 100, miners and financials tumble

The market’s correction expectedly continued into Monday as UK’s top tier index shed almost 2% to extend the losses it posted on Friday on the CPI update, which shattered investors’ confidence that the world’s leading economies will recover as quickly as previously expected.

The index sank almost 100 points by midday as none of the FTSE 100 constituents was even in the blue. However, stocks moderately rebounded, cutting the FTSE 100’s losses to 80 points as some companies showed up in the blue, however none of them made significant gains.

US stocks opened Monday with steep losses, keeping the Footsie down.

Key movers

Insurers Aviva (LSE: AV) and Legal & General (LSE: LGEN) emerged as two of the few bright spots in the market today, reversing early losses to rise almost 2%.

Business management software supplier Sage Group plc (LSE: SGE) and natural resources group Eurasian Natural Resources (LSE: ENRC) brightened up the day with small gains. Support services group Serco (LSE: SRP) and healthcare company GlaxoSmithKline (LSE: GSK) also managed to stay afloat, rising marginally.

The top fallers were spearheaded by the mining sector, oil and gas midcaps and troubled tour operator Thomas Cook Group (LSE: TCG), which continued its freefall after it released a disappointing interim report, negatively impacted by the swine flu. It was complemented by rival TUI Travel (LSE: TT), which also put up weak numbers and offered a gloomy mid-term outlook. Thomas Cook slipped almost 5% today.

While two major insurers showed up on the leaderboard, their peers Old Mutual (LSE: OML) and Prudential (LSE: PRU) declined heavily, shedding over 4.5% each.

Property companies also failed to evade losses with the sentiment hit by British Land, which plans to quash the rumours of an imminent takeover of property giant British Land Co (LSE: BLKT) by a consortium led by Indian steel mogul Lakshmi Mittal and the Abu Dhabi ruling family, which surfaced in the media last week and propelled the commercial property sector to good gains, which they surrendered today.

Defensive stocks also found themselves on negative territory today with major utility companies Severn Trent (LSE: SVT), Pennon Group (LSE: PNN) and Northumbrian Water Group (LSE: NWG) losing 2-3%.

There were also some notable movers among juniors. Maker of electronic equipment for boats Raymarine (LSE: RAY) swelled almost 50% after the Sunday Times reported the company received a takeover approach from American navigation devices manufacturer Garmin (NASDAQ: GRMN). The company later confirmed it was involved in takeover negotiations with a number of parties.

Commodities

Oil prices plummeted after Friday’s CPI update, dragging oil & gas stocks down. September US light crude declined to US$66.2/barrel, while Brent crude also retreated below US$70 per barrel, settling at US$68.99.

Oil and gas sector: majors disappoint, some juniors deliver gains

Oil & gas majors and midcaps all were in the negative on Monday. BP (LSE: BP) shed 1.2%, while fellow supermajor Shell (LSE: RDSB) retreated just 1%.

Midcaps followed as Tullow Oil (LSE: TLW) and BG Group (LSE: BG) declined 3.7% and 1.3% respectively. Cairn Energy (LSE: CNE) emerged as the sector’s leading faller in the FTSE 100.

FTSE 250 oil and gas company Heritage Oil (LSE: HOIL) also disappointed, dipping 5.8% following the release of a drilling update from its project in Kurdistan, saying it expects its Miran West-1 well to produce between 8,000 and 10,000 barrels per day once it enters production.

Dragon Oil (LSE: DGO) pushed itself further down by saying it will miss production goal set for 2009 due to operational issues, falling over 3.5%.

Some juniors escaped with big gains on what has otherwise been a disappointing day for the oil and gas sector. Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) jumped over 15% today, while US focused junior Empyrean Energy (AIM: EME) and Europe focused oil and gas developer Ascent Resources (AIM: AST) followed with gains of 15% and 7% respectively.

Most of the companies, however, moved with the market and plunged deep into the red. Among the notables were Western Europe operating oil and gas company Northern Petroleum (AIM: NOP), Latin American oil producer and explorer Gold Oil (AIM: GOO) and Iraq, Syria and Gulf of Mexico operating Gulfsands Petroleum (AIM: GPX) all slipped 4-5%.

Ukraine focused gas producer Regal Petroleum (AIM: RPT) and energy investor Xtract Energy (XTR) also disappointed, sliding about 3% each.

Precious metal miners: majors disappoint, juniors mixed

Despite having already posted massive losses on Friday and Monday morning, gold continued its freefall for the whole day, ultimately moving closer to the US$930 threshold. Other previous metals joined in hitting new landmarks, with Silver sliding just below US$14.00 per ounce and Platinum losing over US$3o to arrive at US$1,225/ounce by the end of the day.

The falling prices pushed precious metal stocks deep into the red in morning trade. Platinum miner Aquarius Platinum (LSE: AQP) moved down 7.4% to 261p per share, while specialty platinum catalyst firm Johnson Matthey (LSE: JMAT) declined a further 4.4%, adding to the losses it sustained last week after UBS downgraded its stock to “sell” from “neutral.” Another platinum producer Lonmin (LSE: LMI) slipped about 4% to 1,389p per share.

The world’s largest primary silver miner Fresnillo (LSE: FRES) declined 1% after releasing its interim update today, and mid-tier silver producer Hochschild Mining (LSE: HOC) lost 3%, moving down to 265p per share.

Gold producers didn’t fare better as Randgold Resources (LSE: RAND) lost 3.7% and Peter Hambro Mining (LSE: POG) joined in with a 3.3% fall.

Juniors were headed in different directions on Monday.

Turkey focused gold miner Ariana Resources (AIM: AAU), Philippines focused gold producer Medusa Mining (AIM&ASX: MML), Western Australia operating Norseman Gold (AIM: NGL) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) followed the trail, sliding 3.8%, 5.6%, 5.1% and 3.3% respectively.

But Canadian gold and copper miner Rambler Metals and Mining (AIM: MRR) and mineral exploration and development junior, Mercator Gold (AIM: MCR) both gained 4.4%. Mercator said today it acquired an exclusive option over the Copper Flat copper-molybdenum-gold-silver project in New Mexico.

Solomon Islands focused gold and copper prospector Solomon Gold (AIM: SOLG) was in the lead with a 15% hike after an upbeat exploration update.

Red Rock Resources (AIM: RRR) also released news today, saying it was set to acquire a 60% stake in the Mid-Migori Mining Company, a subsidiary of the Kansai Mining Corporation. Mid-Migori owns the beneficial and mining rights to the Migori Gold Project in western Kenya. The company jumped 13% on the news.

Gold, copper and molybdenum explorer Stratex International (AIM: STI) improved 4.6% after announcing a JV agreement with Centerra Gold.

Base metal miners slide

Base metal prices also tumbled as the recent gloomy economic updates added to an already mixed outlook for the demand for base metals. Copper fell to US$2.72/pound, Nickel dipped 23 cents to US$8.55/pound, while Zinc actually recouped early losses, climbing back to US$0.80/pound. Predictably enough, base metal miners were among the leading fallers in the FTSE 100.

Majors Anglo American (AAL), Antofagasta (LSE: ANTO), Rio Tinto (LSE: RIO), Kazakhmys (LSE: KAZ), Vedanta Resources (LSE: VED) and BHP Billiton (LSE: BLT) all slipped 4-5% on Monday. Anglo American led the pack with a 5.7% dip, while BHP outperformed its peers, shedding less than 3.5%

Unlike in the oil and gas and precious metals sectors, juniors were largely on decline.

Tunisia focused metal miner Maghreb Minerals (AIM: MMS) was in the lead as its stock plummeted 15%. Uranium and copper explorer Kalahari Minerals (AIM: KAH) and China focused cement operator Prosperity Minerals Holdings Limited (AIM: PMHL) both lost over 4%.

London’s only listed pure iron ore producer Ferrexpo (LSE: FXPO) shed 6.5%.

Indonesia operating copper miner Finders Resources (AIM: FND), which did not release any news or updates today, went against the market trends, climbing 9.3%.  Nickel and Iron Ore junior Regency Mines (AIM: RGM) improved 8.7% today.

Mineral sands producer Kenmare Resources (LSE: KMR) and Australia focused coking coal producer Caledon Resources (AIM: CDN) also went against the tide, rising about 2%.

Telecommunications, technology and pharmaceuticals

British stamp-collecting and memorabilia group Stanley Gibbons Group Ltd (SGI.L) moved down 4.6%, while investment fund LonZim (AIM: LZM) and Electrical products manufacturer and supplier Cinpart PLC (AIM: CINP) joined in with losses of 5% and 3.5% respectively.

Human-based tissue services provider Asterand (LSE: ATD) rose 5.7% and environmental science and technology company Accsys Technologies (AIM: AXS) and analysis software developer Medicsight (AIM: MDST) also were in the blue, going up 2% each.

Junior diamond explorer and developer, Kopane Diamond Developments (AIM: KDD) rose 4%.

Banks, insurance, private equity

Financials failed to surprise the market on Monday, moving down along with other stocks. Some insurers, however, were able to climb back above the water by midday, albeit barely holding on to their gains.

Major banking groups Lloyds (LSE: LLOY) and Barclays (LSE: BARC) both fell almost 4%. Royal Bank of Scotland (LSE: RBS) declined 2.7% and HSBC (LSE: HSBA) moved down 1.6%.

Insurer Friends Provident (LSE: FP) moved down 2%, following its peers Old Mutual and Prudential, which set the tone in the sector with falls of over 4%. Standard Life (LSE: SL) shed less than 1%.

However, Aviva (LSE: AV) and Legal & General (LSE: LGEN) rallied from early losses, climbing back into the positive to emerge as the market’s leading risers with gains of almost 2%.

Junior home credit and motor finance specialist S & U Plc (LSE: SUS), which impressed with 3 straight days of gains, could not escape the negative market trend and was sitting in the red at the end of the day, signalling an end to its winning streak.

Large and Mid Cap News

Construction group Morgan Sindall PLC (LSE: MGNS) said its affordable housing division Lovell, alongside Maple Grove Developments, has been confirmed by Craven District Council as preferred partner for a £35 million regeneration scheme in Skipton, North Yorkshire.
Mexico City-based silver producer and FTSE 100 constituent Fresnillo Plc (LSE: FRES) said it was able to raise production in the first half, but the miner’s financial performance was hit by weaker silver prices. Fresnillo’s attributable silver production rose to 18,805 koz (thousand ounces) in H1, a 7.8% year on year improvement.

Dragon Oil PLC (LSE: DGO) said while the overall production growth in the first half was below its expectations, it expects more wells to come on stream in the current second half with the aim to complete up to 35 wells during the 2009-11 period. In its results statement for the six months to June 30, 2009, the company said average gross production increased by 11 percent over the previous first half to 42,808 barrels of oil per day from 38,482 bopd, of which 27,782 bopd was attributable to the group, compared with 20,850 bopd previously.

FTSE 250 constituent oil and gas company Heritage Oil (LSE: HOIL, TSX: HOC) said it has wrapped up the testing of its Miran West-1 discovery in Kurdistan, suspending the well as a future producer and moving on to the Mira West-2 appraisal well.

QinetiQ Group PLC (LSE: QQ) announced that Metrix, its joint venture with France’s Sodexo, has been awarded a £31 million contract by the UK Ministry of Defence, as part of the Defence Training Review (DTR) Package 1 PFI Project. The Early Training Transformation (ETT) contract will see Metrix, the preferred bidder for the MoD's DTR Package 1 Project, take the first important steps toward providing key improvements to the UK armed forces' specialist training programmes.

Small Cap News

Empyrean Energy PLC (AIM: EME) said it has been informed by Krescent Energy Co LLC, the operator of the Riverbend gas project in Texas, that a drilling contract is now in place for the re-entry and drilling of the Quinn 3H well. When Quinn 3H was previously drilled, it encountered multiple gas flares and shows in the primary target zone before hitting a very high pressure gas zone that ultimately resulted in a blowout.

London listed mineral exploration and development junior, Mercator Gold (AIM: MCR) said it has added a copper-molybdenum-gold-silver project in the state of New Mexico, United States to its portfolio. Mercator is paying US$150,000 for the grant of the option.  Mercator has six months to complete due diligence, and if it decides to move ahead with the project, will pay US$9.85 million over a period of 12 months from 14 February 2010.  The vendors of the project would also retain a net smelter return (NRS) of 3.25%.

Theme park queuing systems group Lo-Q PLC (AIM: LOQ) said its ordinary shares have been admitted to trading on Sharemark. They will continue to trade on AIM. Sharemark is primarily aimed at private investors and is based on an order-driven trading system. The directors believe this second trading facility will compliment the LSE's existing quote driven system and aid the liquidity of its shares, the company added.

According to a report in the Sunday Times, the troubled maker of electronic equipment for boats Raymarine (LSE: RAY) has reportedly received an approach from American satellite navigation giant Garmin (NASDAQ: GRMN).  Last month Raymarine said it would either go for an equity fundraising or entertain sale offers after the company said it was operating close to the limit of its current bank facilities. Raymarine later confirmed it was involved in takeover talks with a few parties.

Max Petroleum PLC (AIM: MXP) said the loan commitment under its senior credit facility with Macquarie Bank Ltd has been increased to US$80 million. The previous commitment was US$55 million. Max also amended the facility to defer the repayment of principal until 2011 and to remove various events of default based upon the company meeting certain milestones on or before November 2009.

Stratex International PLC (AIM: STI), the junior exploration company with substantial interests in Turkey, announced another milestone this morning in the form of a joint venture with mid-tier gold producer, Centerra Gold Inc (TSX: CG). The joint venture will see Centerra fund a US$3 million, three year exploration program at Stratex’s Öksüt project to earn a 50% interest in the project. . Centerra is also reimbursing Stratex for exploration costs of approximately US$0.13 million.

Red Rock Resources PLC (AIM: RRR) said it entered into an agreement with Kansai Mining Corp Ltd allowing it to acquire up to 60 percent of Kansai unit Mid-Migori Mining Co Ltd, a Kenyan group which owns the beneficial title and mining rights to the Migori gold project in the country. The Migori project has an indicated resource of 1,172,000 ounces gold, with an expectation that this figure may be raised significantly on resumption of the incomplete 2007 drill programme.

Junior gold exploration company, Solomon Gold (AIM: SOLG) updated investors on its joint venture with heavyweight Newmont Mining Corp (NYSE: NEM) on the Guadalcanal project, Solomon Islands. Newmont Mining is earning up to 51% in the project through expending US$6 million over three years, with an option to increase its stake to 70% thereafter by expending a further US$6 million within 2 years. Highlights from exploration to date were aplenty, which was mainly focused on early stage rock sampling, mapping and preliminary interpretation of recently completed airborne electromagnetic and magnetic data.

BCB Holdings Ltd (AIM: BCB) said its main Financial Services business has made a satisfactory start to fiscal 2010, posting operating profit in the first quarter to end June 30 2009 of US$11.3 million, compared with US$12.6 million a year earlier. BCB was previously known as BB Holdings Ltd, and since its acquisition in May of investment trust Cockleshell Ltd, changed its name as well as its AIM code, to ‘BCB’ from ‘BBHL’.

Xtract Energy PLC (AIM: XTR) said it has sold the remaining 14.375 million shares it held in MEO Australia Ltd (ASX: MEO), an approximately 3.4 percent stake. It realised in aggregate A$7.07 million from the share sales.

Junior diamond explorer and developer, Kopane Diamond Developments (AIM: KDD) has signed a memorandum of understanding (‘MOU’) with Standard Lesotho Bank to finance the construction of a power line to the company’s Liqhobong diamond operations in Lesotho.

Helius Energy PLC (AIM: HEGY) said it is forming a joint venture with The Combination of Rothes Distillers (CoRD) in Speyside, North Scotland, to create a £50 million biomass combined heat and power plant fuelled by distillery by-products.

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