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US stocks steady the ship after yesterday's shake-out

Published: 00:23 17 May 2014 AEST

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US equities mirrored their UK counterparts in indecisiveness, though marking time may come as a relief after yesterday’s shake-out.

Darden Restaurants was friendless after it agreed to sell its Red Lobster restaurant chain while Chesapeake Energy was the biggest faller among constituents of the S&P 500 after announcing massive redundancies.

On the plus side, luxury department store Nordstrom headed north after better-than-expected results, while telecoms titan was wanted after super-investor Warren Buffett revealed he has built up a stake in the company.

The S&P 500 was down 0.3%.

In the UK, the week looks set to fizzle out after a lacklustre morning for London’s blue-chips.

The FTSE 100 was down 0.4% at 6,817, despite a decent show from defensives, such as supermarkets (Morrisons, Sainsbury’s and Tesco), tobaccos (BATS), drinks (Diageo) and consumer goods (Unilever).

There was little news to inject life into the index however. Bottling group Coca Cola HBC (LON:CCH) dipped after saying conditions were tough in the latest quarter.

Fresh from the agreed merger with Dixons Retail (LON:DXNS), Carphone Warehouse (LON:CPW) announced the sale of the Virgin Mobile France business in which it had a 46% stake.

The business went for 325 million euros.

Carphone Warehouse shares were in the black today, having slumped yesterday on news of the merger with the PC World and Currys owner.

In the small-cap sector, shares in Petroceltic International (LON:PCI) edged higher after it brought in a major new shareholder from Malaysia as part of a US$100m fund raise to bolster its exploration efforts.

Dovenby Capital, an investment company led by Dato' Ahmad Fuad, will put up half of the money with the remainder to come from institutional shareholders through a book-build placing.

Petroceltic added the money will also tide it over while it waits for the first chunk of its farm-out payment for the Ain Tsila gas field development in Algeria from state-owned Sonatrach.

The Algerian company has agreed to pay Petroceltic US$20mln upfront, development costs of US$140mln and two contingent amounts of US$10mln.

Petroceltic, which also has interests in Egypt, Kurdistan, Bulgaria and Romania, posted a loss of US$19mln in 2013 following write-offs of US$37mln for unsuccessful wells.

Falcon Oil & Gas (LON:FOG, CVE:FO) fell 15% to 7.3p after plugging and abandoning the first well in Hungary when testing failed to produce commercial rates.

The company also announced the spudding of the second well as it continues to assess the potential of the Algyo Formation in the Mako Trough.

“I look forward to sharing the results of the second well and building on the knowledge of what we have learned from the testing of Kutvolgy-1 with the market in due course,” said chief executive Philip O’Quigley.

Sticking with the junior oil sector, Tethys Petroleum (LON:TPL, TSE:TPL) drilled three successful wells in Kazakhstan in the first quarter as it works towards a step-up in production and prepares to begin higher-value gas exports to China.

These ‘shallow’ wells are predicted to add more than 20mln cubic feet of gas production per day, based upon the performance of similar well results. The wells will be ‘tied-in’ and more drilling is planned.

Indeed, earlier this week Tethys unveiled plans to raise US$15mln to safeguard these plans.

The group is awaiting government clearance for a US$75mln farm-out deal with Chinese firm SinoHan Oil and Gas Investment, agreed in November, and the equity funding allows work to progress in the meantime.

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