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Web Site:	Proactive Investors Australia
Other Articles:	11-08-201006-08-201005-08-2010

Lloyds, Barclays and RBS lift FTSE 100 to 4,900, commodities advance

Overview: The FTSE 100 had yet another good day on Monday, still reaping gains from the recovery sentiment strengthened by US home sales update, which came out last Friday coupled with Ben Bernanke’s comments that US economy could soon start emerging from the recession.

Helping out on Monday morning was the Institute of Chartered Accountants in England and Wales, which said business confidence improved to 4.8% at the end of June from -28.2 in March, further adding to the solidifying recovery hopes.

The sentiment was further bolstered by the Asian markets as the leading indexes in Japan and China rose on recovery hopes before trading opened in London.

The FTSE 100 got off to a strong start and continued its rally until trading was closed, hitting new 2009 highs and moving closer to yet another milestone, being just a few points away from the 4,900 mark after clearing 4,800 late last week.

Mining stocks once again performed well, giving a boost to the FTSE 100. World’s largest miner BHP Billiton (LSE: BLT) surged 6.5%, emerging atop of the leaderboard.

Advertiser WPP Group (LSE: WPP) followed with a 6.8% rally.

Copper miner Kazakhmys (LSE: KAZ) also was solid, climbing over 5%. Silver producer Fresnillo (LSE: FRES) and Kazakhstan-based group Eurasian Natural Resources (LSE: ENRC) also performed well, tacking on 3-4%.

Financial stocks also were in buying mode this morning, led by partly nationalised banking groups Lloyds (LSE: LLOY) and RBS (LSE: RBS), which have been reportedly selling repossessed property assets to their own subsidiaries to avoid risks associated with putting them on the open market. Both improved over 5%. Fellow banking group Barclays (LSE: BARC) joined the party with a 4.6% gain.

Packaging firm Bunzl (LSE: BNZL) released strong H1 results, helping it to a 4.5% increase.
With the exception of distribution group G4S (LSE: GFS), whose interim results failed to meet expectations despite increases in profits and revenues, pushing it down over 3%, and BG Group (LSE: BG), which was down 2% after reporting the well it drilled offshore Brazil in collaboration with Petrobras was dry, no FTSE 100 constituent declined more than 1.5%.

Oil and gas sector still on the rise

Oil prices rose for another day, building on Friday’s solid gains. US light crude improved to US$73.8/barrel, while Brent Crude remained at US$73.5/barrel.

Key oil and gas stocks progressed further following Friday’s strong performance on the back of positive economic updates from the US.

BP (LSE: BP) ended the day flat, while fellow supermajor Shell (LSE: RDSB) tacked on 2%. BG Group (LSE: BG) lost 2%, retreating to 1,053p per share.

Midcaps fell into roughly the same pattern. Dragon Oil (LSE: DGO) outperformed the sector with a 6% rally.

Tullow Oil (LSE: TLW) and Cairn Energy (LSE: CNE) both finished in the black, improving 2.4% and 1% respectively. Dana Petroleum (LSE: DNX) went against the tide and finished in the red, as did Heritage Oil (LSE: HOIL).

Juniors mostly basked in the sun.

Canadian focused oil and gas group Enegi Oil (AIM: ENEG) rallied 21%, while Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) also impressed, surging over 10%.

Iraq operating Irish oil company Petrel Resources (AIM: PET) and Ukraine focused gas producer, Regal Petroleum (AIM: RPT) followed, advancing 8% and 6.7% respectively.

Latin America and US operating oil producer Pan Andean Resources (AIM: PRE) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) both climbed over 5%.

Chinese coal bed methane developer Green Dragon Gas (AIM: GDG) and European focused oil and gas developer Ascent Resources (AIM: AST) also didn’t disappoint, adding over 4%.

Precious metal miners rise

Precious metals were headed in different directions on Monday. As gold held steady, silver continued rising and platinum slipped.

Gold declined slightly, moving down to US$952/ounce, while Silver advanced further, climbing to US$14.38/ounce. Platinum shed US$11, arriving at US$1,237/ounce.

With rare exceptions, precious metal miners performed strongly.

Platinum miner Lonmin (LSE: LMI) led the group with a 4% rally.

Fellow platinum producer Aquarius Platinum (LSE: AQP) rose almost 2%, while specialty platinum catalyst firm Johnson Matthey (LSE: JMAT) followed with a 1.2% gain.

FTSE 100 silver producer Fresnillo (LSE: FRES) advanced 3%, while mid tier silver miner Hochschild Mining (LSE: HOC) rallied over 5%.

Gold producers were led by Peter Hambro Mining (LSE: POG), which posted a solid 4.7% gain. Randgold Resources (LSE: RRS) advanced 2%.

Unlike major miners, not all juniors caught the momentum as the group was largely mixed at midday.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM), which has successfully commissioned a new oxide processing circuit, were in the lead, rallying 12.5% and 11% respectively.

UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) followed with a 9.4% surge.

Africa operating gold miner GMA Resources (AIM: GMA) also did well, advancing over 5%.

Philippines focused gold producer Medusa Mining (AIM&ASX: MML) was up 4.2%.

UK and Canadian listed mineral exploration and development junior, Rambler Metals and Mining (TSXV: RAB, AIM: RMM) and Metals Exploration (AIM: MTL), which is developing a large gold-molybdenum project in the Philippines, also gained, adding 4.3% and 3.2%.

However, London listed mineral exploration and development junior Mercator Gold (AIM: MCR) and Uzbekistan focused gold miner Oxus Gold (AIM: OXS) disappointed, dipping 10% and 7.4% respectively.

Turkey focused gold miner Stratex International (LSE: STI) joined in with a 3.8% slide after Canadian mining giant Teck Resources relinquished its interest in Stratex’ gold projects in Turkey in exchange for shares, increasing its stake in the company to 14.3%.

Base metal miners follow

Base metal prices gave up some of the early gains. Copper retreated to US$2.87/pound, while Nickel slipped to US$8.95/pound. Zinc returned to Friday’s level of US$0.82/pound.

Base metal miners were among the best performing groups on Monday.

World’s largest miner BHP Billiton (LSE: BLT) emerged as the leader among majors in the mining sector, surging 6.2%.

Copper miner Kazakhmys (LSE: KAZ) and Antofagasta (LSE: ANTO) followed gains of 5.7% and 4.3% respectively.

Anglo American (LSE: AAL), Rio Tinto (LSE: RIO), Xstrata (XTA) and Vedanta Resources (LSE: VED) all added 3-3.5%.

Junior miners were mixed with a few notable fallers.

Russian focused Amur Minerals (AIM: AMC) continued correcting after quadrupling its stock price last week, shedding a further 31%.

Copper and nickel explorer Regency Mines (AIM: RGM) managed to eclipse Amur’s steep decline, plummeting 44%.

However, there were a couple of bright spots as well. Junior zinc miner Connemara Mining (AIM: CON) rose 18%, while Indonesia operating coal miner Churchill Mining (AIM: CHL) and South American focused miner Herencia Resources (AIM: HER) followed with gains of about 5%.

Banks, insurance, private equity

With the exception of HSBC (LSE: HSBA), which was flat after announcing it would enter the European exchange traded fund, major banking groups performed very well.

Royal Bank of Scotland (LSE: RBS) led with a 5% surge, while Lloyds (LSE: LLOY) and Barclays (LSE: BARC) followed, advancing over 4% each.

Standard Chartered (LSE: STAN) rose about 1%.

Insurers also started in the positive, but their gains were less impressive.

Legal & General (LSE: LGEN) climbed 3.6%. Old Mutual (LSE: OML) and Friends Provident (LSE: FP) added over 2%, while Aviva (LSE: AV) and Prudential (LSE: PRU) tacked on less than 1%.

Small Cap Movers

Other notables included Computer-Aided Detection (CAD) and image analysis software specialist, Medicsight (AIM: MDST), which rose 5% and Rubicon Software Group plc (LSE: RUBI) with an 8% rally.

Large and Mid Cap News

Interim results from Petrofac (LSE: PFC), the FTSE 100 constituent and oil facilities solutions provider, did not disappoint this morning. Financial highlights included first half order intake of US$5.8 billion (2008: $1.7 billion) with a order backlog of US$8.4 billion at the end of June (US$4 billion at the end of December 2008).  Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 16% to US$207.5 million (H1 2008: US$179.2 million), while net profit climbed 20% to US$145.6 million (H1 2008: US$121.2 million).

Melrose (LSE: MRO) said it had agreed to sell its Crisplant business to Beumer Group for a total consideration of €30 million in cash.  Completion of the sale is expected to occur in the next three weeks. Melrose will use the cash to pay down group debt.

FTSE 250 constituent QinetiQ (LSE: QQ) has inked a deal with the Australian Defence Force to supply its ‘Talon’ military robot in a deal worth A$23 million. The Talon Robot has a number of tasks that it can be used to complete, including reconnaissance, hazardous material identification, police or Special Forces assistance and bomb disposal.

Interim results from Amlin PLC (LSE: AML) jumped this morning after the company reported its highest first half profit after tax to date.  The FTSE 100 insurance and re-insurance group was up 5.5% after one hour of trading.

Turbine and power system manufacturer Rolls Royce plc (LSE: RR) said today it has further expanded its participation in the West to East Gas Pipeline Project (WEPP) in China by securing two major power system installation deals.

Shares in Johnston Press (LSE: JPR) jumped by more than 10% this morning despite the company quashing press speculation that it was preparing to sell ‘The Scotsman’ newspaper to a consortium of investors.

Distributing and outsourcing group Bunzl plc (LSE: BNZL) reported strong H1 performance amid “difficult conditions,” driven by favourable exchange rates and successful cost reduction initiatives, propelling it to project further growth in H2 and raise the interim dividend.

Security solutions group G4S (LSE: GFS) released its H1 results today, posting substantial revenue and profits increases, coupled with an organic growth of 4.8%. Yet investors and brokers apparently expected more of the government segment focused business, giving the interim results a rather cool reception.

FTSE 250 constituent builder Bovis Homes Group (LSE: BVS) reported losses and revenue drops in its interim results released today, but said private reservations have improved and housing prices showed signs of stabilisation.

Small Cap News

Eastern European focused junior Aurelian Oil & Gas plc (AIM: AUL) today said the drilling of the Voitinel-1 exploration well in the Brodina Concession in Romania started last Friday, marking its first effort to test the Carpathian sub-thrust play.

Fiji focused gold miner Vatukoula Gold Mines (LSE: VGM) said it has successfully commissioned a new oxide processing circuit at its wholly-owned Vatukoula gold mine in Fiji in an operational update released today, also noting it now expects to produce between 6,000 to 6,500 ounces in the final quarter of the year due to the delays in deliveries of new haulage equipment.

Turkey operating gold miner Stratex International Plc (AIM: STI) said today Canadian zinc miner Teck Resources Limited (TSX: TCK, NYSE: TCK) has pulled out of six of its exploration projects in Turkey, selling the earn-in options back for Stratex shares worth a total C$750,000, expanding its stake in the company to 14.3%.

Media and games group Mirada plc (AIM: MIRA) said today it has secured a contract from the Uruguayan government which could earn it US$500,000 this year, marking its first deal in the South American market.

Surrey-based budget fuel cell maker AFC Energy (AIM: AFC) and petrochemical company INEOS ChlorVinyls said today they have reached a deal to jointly work on a hydrogen fuel cell project at INEOS’s Runcorn Site manufacturing complex in Cheshire.

Insurance, wealth management and employee benefits advisory business, CBG Group plc (AIM: CB.) reported sharp fall in first half earnings per share (EPS) as the group’s financial services division swung to a first half operating loss.

DQ Entertainment (AIM: DQE), the children’s animation media company, notched up a further contract win for its 3D animated TV series ‘Casper’.   French media giant, Viacom (NYSE: VIA), will air the series on ‘Nick’ – a children’s channel – across the entire South Asia region.

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