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Oil, Gold, Silver and Copper slide, but FTSE gains as Wall Street opens higher

Published: 01:45 19 Sep 2009 AEST

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Overview: the FTSE 100 opened lower after Wall Street closed with a small decline on Thursday. Oil and metal prices also decreased, causing mining and energy stocks to turn negative in early trade.

Later, however, the blue chips recovered and the Footsie ended the day with modest gains to keep the winning streak going, lifted by a strong performance from retailers Kingfisher (LSE: KGF), Next (LSE: NXT) and Tesco (LSE: TSCO), as well as insurers Old Mutual (LSE: OML) and Standard Life (LSE: SL), which gained about 2% after a slow start in the sector.Wall Street also opened higher with the Dow Jones industrial average rising 40 points in early trade.

The leader in the FTSE 100 Kingfisher was buoyed by yesterday’s impressive interims, which led to increases of the group’s price targets by brokers Bank of America-Merrill Lynch, Deutsche Bank, Citigroup and Societe Generale. Commercial property company Hammerson (LSE: HMSO) followed with a gain of 3.5%. Software manufacturer Autonomy Corporation (LSE: AU) also was in the top three, advancing 3.3%.

Drugmaker GlaxoSmithKline (LSE: GSK) made it to the leaderboard on reports that it is engaged in talks to acquire a 5% stake in Dr. Reddy’s Laboratories.

Tullow Oil (LSE: TLW) emerged as the leading faller, shedding 5% on profit taking. Engineering group Balfour Beatty (LSE: BBY), which is set to acquire US project group Parsons Brickerhoff for £380 million, declined 3.3%.

Telecom operator Inmarsat (LSE: ISAT) and utility company Centrica (LSE: NCA) also were in selling mode today, shedding over 2%.

Commodities

Oil prices inched lower today as West Texas Intermediate slid to US$72.1/barrel, while Brent Crude was at US$70/barrel.

Major oil and gas stocks mostly fell. BP (LSE: BP) posted marginal losses, while fellow supermajor Shell (LSE: RDSB) tacked on less than 1%. BG Group (LSE: BG) continued declining on profit taking, shedding 1.3%.

Tullow Oil (LSE: TLW) also cooled off as investors were reaping profits from its recent surge, losing over 5%, while Cairn Energy (LSE: CNE) dropped 3%. Another FTSE 100 constituent Petrofac (LSE: PFC) declined marginally.

Heritage Oil (LSE: HOIL) emerged as the leading faller in the sector in the FTSE 250, slipping over 3%. Yet fellow mid tiers Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO) managed to stay above the water, with the latter rising over 2% of what was a slow day in the sector.

EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) were among the leading risers among the juniors in early trade, rallying 10% and 11% respectively.

US focused junior Empyrean Energy (AIM: EME) followed with a 7% climb. European focused oil and gas developer Ascent Resources (AIM: AST) also gained, adding over 4%.

Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and Latin American focused Gold Oil (LSE: GOO) headed in a different direction, sliding 4.4% and 3.2% respectively.

Precious metals miners decline as prices slide

Gold failed to hold on to the US$1,020/oz mark, retreating to US$1,008/oz. Other precious metals fell into the same pattern, declining after making strong gains during the week. Silver slid to US$17.03/oz, while Platinum declined to US$1,329/oz.

All blue chip miners were in the red today.

Gold miner Randgold Resources (LSE: RRS) slid 2.2%, while fellow yellow metal producer from the FTSE 250 Peter Hambro Mining (LSE: POG) moved down 1.5%. Yamana Gold (LSE: YAU) dipped 5%.

Platinum producer Lonmin (LSEL LMI) shed 3%, while FTSE 250 miner Aquarius Platinum (LSE: AQP) declined marginally.

FTSE 100 constituent Fresnillo (LSE: FRES) was down 1.7%, while fellow silver producer mid cap Hochschild Mining (LSE: HOC) lost 2.6%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined 3%.

Fijian focused gold miner Vatukoula Gold Mines (LSE: VGM) and South American focused mineral exploration and development company Minera IRL (LSE: MIRL) led the juniors with gains of 4% and 3%.

Sierra Leone and Guinea operating diamond miner West African Diamonds (AIM: WAD) was the leading faller among the juniors, slipping over 9%. Fellow diamond miner with operations in Lesotho Kopane Diamond Developments (AIM: KDD) lost 5%.

Argentina focused gold explorer Patagonia Gold (AIM: PGD) and South American focused Mariana Resources (AIM: MARL) both shed 4%, as did African focused gold deposit developer Cluff Gold (AIM: CLF) and Turkey focused gold miner Ariana Resources (AIM: AAU).

Copper, Nickel edge lower to weaken miners

Prices went south on Friday. Copper moved down to US$2.80/pound, while Nickel declined to US$7.78/pound. Zinc slid to US$0.86/pound.

With the exception of Rio Tinto (LSE: RIO), which managed to stay above the opening level, all major base metals miners declined.

Anglo American (LSE: AAL) and Antofagasta (LSE: ANTO) were at the bottom of the pile, sliding 2.2% and 1.5% respectively.

BHP Billiton (LSE: BLT), Kazakhmys (LSE: KAZ), Xstrata (LSE: XTA) and Vedanta Resources (LSE: VED) all finished with insignificant losses.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) lost 3.3%.

Shares in Red Rock Resources (AIM: RRR) jumped 14.7% this morning after Jupiter Mines (ASX: JMS) reported rock chip results from the Oakover Manganese Project in Australia. Indonesia operating coal miner Churchill Mining (AIM: CHL) and specialty minerals exploration and development company Thor Mining also did well, rising 10% and 12.5% respectively.

Copper and nickel explorer Regency Mines (AIM: RGM) also was in buying mode, adding 6%.

Nickel laterite play Rusina Mining (AIM: RMLA), Tunisian focused metal miner Maghreb Minerals (AIM: MMS) and South American focused junior miner Herencia Resources (AIM: HER) headed in a different direction, dipping 15.2%, 8% and 6.5%.

Zinc mining and recycling specialist ZincOX (AIM: ZOX) lost 5%.

Banks, insurance, private equity

Financial stocks didn’t show much movement today as no banking or insurance majors moved by more than 2%, except for insurer Standard Life (LSE: SL), which added 2.1%.

Partly nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) were roughly flat, while HSBC (LSE: HSBA) rose 1.4%. Standard Chartered (LSE: STAN) and Barclays (LSE: BARC) both lost 1.3%.

Insurers did slightly better. Old Mutual (LSE: OML) climbed 1.6%, while Legal & General (LSE: LGEN) posted marginal gains and Prudential (LSE: PRU) was unmoved. RSA Insurance Group (LSE: RSA), friends Provident (LSE: FP) and Aviva (LSE: AV) all declined 1% or less.

JP Morgan Chase (LSE: JPM) had its early gains wiped out to finish 2% in the red.

Large and Mid Cap News

 

Military goods manufacturer Chemring (LSE: CHG) said the full year outlook was in line with expectations as revenues in the four months to the end of August rose 40% to £142 million, while the order book expanded to £574 million from £377 million, marking a 28% increase.

UK Based Commercial Property firm British Land Plc (LSE:BLND) has announced that it has entered into a joint venture with the Blackstone Group. The deal will see the Blackstone Group acquire a 50% stake in British Land’s Broadgate Estate situated in the City of London.  British Land suggest that the deal represents a positive move in its strategy to diversify its assets away from large single assets. Shares in British Land have fallen 1% in early trading this morning.

Diversified mining group Eurasian Natural Resources (LSE: ENRC) agreed to acquire Central African Mining and Exploration Co (CAMEC) (AIM: CFM) in a £584 million cash-only deal.

Small Cap News

Australian based Global Petroleum (AIM: GBP & ASX: GBP) has released an update of its joint development in the Olmos reservoir, Leighton, Texas USA. The Tyler Ranch #3 reached target depth and is expected to go into production by the end of the month. Investors have responded positively with shares rising over 3.5% in London.

Property investor Primary Health Properties PLC (AIM: PHP) announced it plans a fully underwritten share issue and open offer to raise £57.5 million after expenses, using the money to repay debt and fund acquisitions of medical properties to expand its property portfolio.

Infection and contamination control specialist Tristel (LSE: TSTL) broadened its international reach with two new agreements in the US, where it licensed its proprietary chlorine dioxide chemistry to bleach manufacturer Clorox, and in China, establishing a joint venture to tap into the US$835 million disinfectant market.

The strong interim results released by medical technology company Biocompatibles International (AIM: BII) in late August prompted broker Edison Investment Research to retain its bullish stance on the stock, maintaining a target price at 390 pence per share.

UK institutional investors have backed emerging nickel producer Rusina Mining's (ASX: RML, AIM: RMLA) plans to develop a nickel-chromite mine in the Philippines, by agreeing to invest A$5.75 million in the company.

Gulf Keystone Petroleum Ltd (AIM: GKP) said drilling at its Shaikan-1 well in the Kurdistan region of northern Iraq will soon enter the final target depth between 3,200 and 3,500 metres, and an independent advisory firm will shortly issue a report on the previously announced oil discoveries in the well between 1,467 and 1,710 metres.

Aurelian Oil & Gas PLC (AIM: AUL) announced further board and management changes following the recent appointments of Rowen Bainbridge as chief executive officer and Mark Reid as chief financial officer.

US focused junior oil and gas group Empyrean Energy (AIM: EME) announced the new operator of its Eagle Oil Pool Development Project in California after R&M Oil and Gas acquired Victoria Petroleum USA.

Shares in Red Rock Resources (AIM: RRR) jumped 20% this morning after Jupiter Mines (ASX: JMS) reported rock chip results from the Oakover Manganese Project in Australia.

Fox-Davies Capital issued a note on Ascent Resources PLC (AIM: AST), saying it is encouraged by the string of successes that the oil and gas exploration and production company has been able to produce.

Songbird Estates (LSE: SBDB) said today it has agreed to purchase over 54 million shares in the capital of Canary Wharf from Frankfurt-headquartered Commerzbank AG in a £112 million deal, increasing its ownership of London’s business and shopping centre to 69.3%.

Argentina-focused Patagonia Gold PLC (AIM: PGD) said its exploration activities are progressing well and it is advancing towards becoming a gold producer as it reported results for the six months to end-June 2009.

San Leon Energy PLC (AIM: SLE) announced that it has conditionally placed 41,866,666 new shares at 15 pence each, raising £6.3 million before expenses  from a number of institutional and other investors.

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