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FTSE 100 falls as stimulus fears re-emerge

Last updated: 00:18 04 Dec 2013 AEDT, First published: 01:18 04 Dec 2013 AEDT

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Fears about an imminent tapering of the US’s asset purchase programme caused Britain’s blue chip index to lose yet more ground on Tuesday.

The FTSE 100 fell 46 points or 0.7% after lunch to 6,549, with miners to blame for the sharp decline, with Antofagasta (LON:ANTO) down 5.3% and Randgold Resources (LON:RRS) down 3.1%.

UBS slashed its 2014 targets for gold and silver, which dragged miners to the bottom of the index.

Not even the best construction data for six years could stem the decline. Markit’s PMI rose to 62.6 last month, up from 59.4 the month before. A reading of 50 or above represents growth.

London’s stocks ignored a positive day for Asian shares and instead took their lead from across the Atlantic as Wall Street suffered a second straight day in the red.

Taper concerns are behind the downbeat trading mood, with future suggesting another losing start for shares on the so-called ‘Street of Dreams’. 

Upbeat US factory data fuelled the concerns, with Friday the next health check for the American economy as jobs numbers are revealed.

The best performing shares in the UK – the few which traded in the black – were the beneficiaries of broker upgrades.

Top of the podium was clothing retailer Next (LON:NXT), up 2.2% on an upgrade to ‘buy’ from Oriel, closely followed by William Hill (LON:WMH), which is now on UBS’s ‘buy’ list.

Sporting goods retailer Sports Direct (LON:SPD) was also among the handful of risers as Liberum Capital picked it out as one to buy in the retail sector.

Exillon Energy (LON:EXI) rose 3.3% to 272p as it was revealed that Hanberg Finance, owned by Russian billionaire Mikhail Gutseriev, is mulling a possible bid for the London-listed oil explorer.

It bought 15% of the company two weeks ago and is considering buying the remaining 85% at a price “not less than 300 pence per share in cash”.

On the small-cap market, Albemarle & Bond (LON:ABM) slumped 20% to 15p as it put up the ‘for sale’ sign on the pawnbroker.

It follows a string of profit warnings and funding issues, culminating in the departure of five directors on Monday.

The company decided the only option was to look for a buyer, but analysts have warned investors to expect a bid ascribing little or no value to the business.

Diamondcorp (LON:DCP) fell 6% even though it has stated to get some cash from its tailing operations as it continues its advance towards full underground production at the Lace diamond mine in Lesotho.

The company passed a significant landmark as it reported the first sales from its tailing re-treatment activities at the mine in South Africa’s Free State province.

It made US$278,574 from 6,442 carats for US$43 a carat as it sold its first stones to Tiffany & Co subsidiary Laurelton Diamonds as part of an off-take agreement.

Proxama’s (LON:PROX) placing may have been at a big discount to the market price, 2.5p compared with Monday’s closing price of 4p, but the company raised nearly £9mln, three times its market capitalisation.

The mobile marketing specialist, down 33% to 2.9p, now hopes it has the cash available to realise its potential.

Low-cost African airline Fastjet (LON:FJET) meanwhile raised £1.3mln by drawing down on its equity financing facility. The shares dipped 4.4% to 2.75p.

Ncondezi Energy (LON:NCCL) shares powered down a similar amount after a discounted placing to raise £3mln.

Broker finnCap however rushed to its defence, arguing that investors have not picked up on the change in momentum and strategy at the Mozambique-based coal to power group.

The house broker sees substantial upside in the share price even on a deeply discounted basis as the company moves through the de-risking project and agrees financing and development packages.

Mariana Resources (LON:MARL) finished the third hole of its drill programme at the Condor de Oro copper, gold mine in Chile and was down 6% with the rest of the market to 4.3p a share.

 

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