Rentokil, Resolution, RSA, Amec, Prudential and Liberty International help FTSE 100 turn positive

Thursday, December 17, 2009

Overview: the FTSE 100 remained 0.3% above the opening level until late afternoon ahead of the conclusion of the Fed’s ongoing two day policy meeting, which, however, is not expected to produce any major changes to the current monetary policy.

The US stock market expectedly rose in early trading after futures for the main indices points to a positive start ahead of the Fed’s statement. The Dow Jones Industrial Average climbed 0.4%, while the broader S&P 500 index rose 0.6%, as did the technology heavy Nasdaq composite.

The UK blue chip index was bolstered by today’s update from the Office for National Statistics revealed that the number of jobless claims in the UK decreased by 6,300 to 1.63 million in November, marking the first month of decline since February last year, while an increase was expected.

Support services company Rentokil Initial (LSE: RTO), insurance investor Resolution (LSE: RSL) and insurer RSA Insurance Group (LSE: RSA) made it to the top three in the FTSE 100 with gains of 4.5%, 4% and 3.2% respectively. Other notable risers included engineering firm Amec (LSE: AMEC) and commercial property company Liberty International (LSE: LII) with gains of over 2.5% and tour company Thomas Cook Group (LSE: TCG), which added more than 2%.

United Utilities (LSE: UU) emerged as the biggest faller among the blue chips with a 2.5% loss. Royal Bank of Scotland (LSE: RBS) and beverage group Diageo (LSE: DGO) followed with declines of 1.2%. medical devices manufacturer Smith & Nephew (LSE: SN) and consumer goods company Reckitt Benckiser (LSE: RB) both added 1%.

Commodities

Oil prices rose today as January Brent Crude reached US$73.13/barrel, while US light, sweet crude improved to US$71.56/barrel.

Most major oil and gas stocks plunged into the red after advancing early in the day. BG Group (LSE: BG) was the top performer in the sector in the FTSE 100, rising 1%. Cairn Energy (LSE: CNE) also remained on positive ground, posting a marginal gain, while Petrofac (LSE: PFC) was flat. Royal Dutch Shell (LSE: RDSB) declined marginally, while fellow supermajor BP (LSE: BP) shed nearly 1%. Tullow Oil (LSE: TLW) also posted a small loss.

Midcaps also were in decline as Dragon Oil (LSE: DGO) declined marginally and Heritage Oil (LSE: HOIL) moved down 1%. However, Dana Petroleum (LSE: DNX) held on to the opening level, rising slightly.

Some of the small caps performed strongly today as Kazakhstan operating Max Petroleum (LSE: MXP) and Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) rallied 18% and 17% respectively to emerge as the top performers in the sector. North America focused oil & gas junior Pantheon Resources (AIM: PANR) moved in the same direction, climbing 4.5%.

Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Africa focused energy company Dominion Petroleum (AIM: DPL) were in decline, sliding 4.5% and 3%, respectively.

Miners climb as gold and silver advance

Precious metals rallied today as while gold was able to get back to US$1,138/oz, silver and platinum reached US$17.63/oz and US$1,455/oz, respectively.

Major mining stocks were in buying mode today as silver miner Fresnillo (LSE: FRES) and platinum producer Lonmin (LSE: LMI) added 1.7%, while fellow FTSE 100 constituent Randgold Resources (LSE: RRS) rose marginally.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) climbed 2%.

Midcaps did better with silver producer Hochschild Mining (LSE: HOC) and gold miner Petropavlovsk (LSE: POG) advanced 3% and Aquarius Platinum (LSE: AQP) added 1%.

Tajikistan operating gold miner Kryso Resources (AIM: KYS) and Argentina focused gold explorer Patagonia Gold (AIM: PGD) emerged as the top performers among the juniors, advancing 13% and 9% respectively. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Western Australia operating Norseman Gold (AIM: NGL), which is set to reaffirm its operational targets at its AGM (annual general meeting) tomorrow, also did well, climbing 5% and 4%, respectively.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) headed in the opposite direction, sliding 16%. Turkey focused gold miner Ariana Resources (AIM: AAU) and commodity asset development company Mercator Gold (AIM: MCR) followed, retreating 7% and 6%, while South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) were down 4%.

Copper and nickel rise

Base metals also rose today with copper and nickel climbing to US$3.14/lb and US$7.74/lb respectively, while zinc remained just below US$1.04/lb.

All major base metal focused stocks rose with the exception of BHP Billiton (LSE: BLT), which was flat. Kazakhmys (LSE: KAZ) led the way with 3% advance, while Xstrata (LSE: XTA), Rio Tinto (LSE: RIO) and Eurasian Natural Resources (LSE: ENRC) followed with gains of about 1.5%. Anglo American (LSE: AAL), Antofagasta (LSE: ANTO) and Vedanta Resources (LSE: VED) all added around 1%.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) outperformed the sector, rising 3.6%.

Zinc mining and recycling specialist ZincOX (AIM: ZOX) and Australia focused coking coal producer Caledon Resources (AIM: CDN) emerged as the top performers in the sector, climbing 8.5% and 8% respectively. Russia focused copper and nickel producer Amur Minerals (AIM: AMC) added 5.5%.

Copper and nickel explorer Regency Mines (AIM: RGM) moved in the opposite direction, shedding 13%. South American focused junior miner Herencia Resources (AIM: HER) followed with a 5% loss.

Banks, insurance, private equity

Financial stocks were mixed today. Barclays (LSE: BARC) led the banking sector with a 1% gain, while HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) rose marginally.

Royal Bank of Scotland (LSE: RBS) was in selling mode with a 1.4% loss, while fellow part-nationalised bank Lloyds (LSE: LLOY) shed less than 1%.

All insurers rose today with the exception of Old Mutual (LSE: OML), which posted a small loss, and Aviva (LSE: AV), which remained flat. RSA Insurance Group (LSE: RSA) was in the lead with a 3.4% climb, while Prudential (LSE: PRU) followed with a 2.7% gain. Admiral Group (LSE: ADM) was up 1% and Legal & General (LSE: LGEN) rose marginally, as did Standard Life (LSE: SL).

Private equity group 3i (LSE: III) was flat.

Small Cap Movers

Other notable movers among the small caps included IP commercialisation company Amphion Innovations (AIM: AMP) with a 9% decline and direct marketing software developer smartFOCUS (AIM: STF), which climbed 9% after saying it would likely beat full year expectations following a series of contract wins.

Large and Mid Cap News

In it pre-close statement British coal-fired power plant operator, Drax (LSE: DRX) said it anticipates full year earnings to be modestly ahead of expectations. According to the FTSE 250 electricity generator, the flexibility and reliability of its operations along with a strong forward contracted position have enabled it to overcome historically low spreads in the UK market.

In an interim management statement, British pub group Punch Taverns (LSE: PUB) said it continues to be materially impacted by the difficult economic conditions. In the 16 weeks to the 12 December 2009 revenues have continued to be pressured in both leased and managed businesses. However the FTSE250 constituent’s non-core pub disposal programme is progressing well, as a result the board has raised its full year disposal estimate to £300 million.

International power system engineers, Rolls-Royce (LSE: RR.) announced a new contract to supply Aviation Capital Group (ACG) with its Trent 1000 engine to power five Boeing 787 Dreamliners . The $170 million order is the first contract between the companies. Boeing’s (NYSE: BA) next generation aircraft made its maiden flight on Tuesday.

In its half yearly results, Comet’s parent company Kesa Electricals (LSE: KESA) reported that group revenue increased by 7.6% to £2.3 billion, improved profitability and further strengthened its balance sheet.

UK listed pharmaceuticals giant, AstraZeneca (LSE: AZN) has announced further progress on its supplemental new drug application for CRESTOR, the cardiovascular disease treatment. The US Food and Drug Administration’s (FDA) Endocrinologic and Metabolic Drugs Advisory Committee (EMDAC) gave a majority vote in the drug’s favour.

Petrofac Ltd (LSE: PFC) said it expects to report a 25 percent year-on-year rise in net profit for the twelve months to end-December 2009 to at least US$330 million, as a result of its success in securing new contracts during the year and the continued good progress across most of its businesses.

Small Cap News

Allocate Software (AIM: ALL) has completed the acquisition of Swedish-based provider of workforce management software Time Care AB, marking the commencement of its expansion into Europe.

Strategic Natural Resources (AIM: SNR) said that RAB Capital plc, acting as discretionary manager of RAB Energy Fund Limited and RAB Octane Fund Limited, acquired an indirect interest in 3.4 million shares in the company, bringing its total interest up to 6.8 million, which is equivalent to 9.05% of the total issued share capital.

Degradable plastics and waste-to-energy company Symphony Environmental Technologies PLC (AIM: SYM) announced a 15 year agreement for Morocco to distribute plastic products incorporating its d2w biodegration additives.

Silence Therapeutics (AIM: SLN) has agreed to acquire Intradigm Corporation to set up an enlarged RNAi (RNA interference) company, aiming to build a competitive offering and “facilitate more deals of greater value within the pharmaceutical industry.”

SmartFOCUS (AIM: STF) is expecting its full year results to be ahead of market consensus following recent contract wins, including the deal with financial services group Liverpool Victoria (LV=) secured earlier this month to streamline its entire marketing strategy.

Privately owned pharmaceutical manufacturing contractor, Recipharm AB has made a 2.25p cash offer for its AIM listed rival Cobra Biomanufacturing plc (AIM: CBF). The Stockholm headquartered Recipharm purchased ordinary shares and convertible loan notes, equating to approximately 60% of the company’s issued share capital. In compliance with the City Code, Recipharm have extended the 2.25p cash offer for the remaining Cobra shares.

Westhouse Securities has put a ‘buy’ rating on Wessex Exploration PLC (PLUS: WX.P) which listed this week, saying the shares offer “excellent high risk upside”, mainly due to its exposure to a Guiana offshore licence operated by Tullow Oil PLC (LSE: TLW).

In his address prepared for tomorrow's AGM (annual general meeting), Norseman Gold’s (AIM & ASX: NGL) Chairman Vince Pendal will reaffirm the company’s operational targets, while prioritizing increasing production and reducing costs for the upcoming year.

Futura Medical (AIM: FUM) said commercial negotiations over its pain relief product TPR100 were underway with a major pharmaceutical business following the completion of in vitro studies, while enhanced sexual control product PET500 could now be marketed in the US without any additional clinical data being required.