Overview: the FTSE 100 turned negative on Monday, dragged down by the mining and oil & gas sector, which were weakened by lower metals and oil prices. Banking and insurance stocks also were in decline in early trade with RBS leading the way.
Royal Bank of Scotland (LSE: RBS) has been reported to be mulling a multibillion cash call to avoid the government’s asset protection scheme, causing it to make it to the bottom in the FTSE 100 with a 6.5% dip. Heating and plumbing products distributor Wolseley (LSE: WOS) declined 5% on no news, as did silver miner Fresnillo (LSE: FRES), which was the leading faller in the mining sector.
Turbine manufacturer Rolls-Royce Group (LSE: RR), which shed about 2.7%, was another non-mining stock to make it to the leading fallers list.
Not much was happening on the leaderboard as only two FTSE 100 constituents managed to tack on 1% or more. Satellite communications company Inmarsat (LSE: ISAT) led the blue chips with a 1.6% advance and retailer Marks & Spencer (LSE: MKS) followed with a 1.2% climb.
Pharmaceutical company AstraZeneca (LSE: AZN), which licensed two products from Nektar Therapeutics today, rose about 0.7%. Medical devices company Smith & Nephew (LSE: SN) and tour operator TUI Travel (LSE: TT) added almost 1%.
Wall Street also opened week after US futures edged down as the Dow Jones industrial average slumped 85 points in early trade, further weighing on the blue chip index, which shed about 30 points, but still held on to the 5,100 mark.
Commodities
Oil benchmarks went south today as West Texas Intermediate slid to US$69.2/barrel, while Brent Crude fell to US$67.3/barrel. October US crude traded below US$72/barrel on recovery concerns and signs of weakening fuel demand. US stockpiles are up 14% compared to last year, while stockpiled of distillate fuels, which includes heating oil, are at 17 year highs.
After being the only bright spot in the oil and gas sector with small advances in early trade, supermajors BP (LSE: BP) and Shell (LSE: RDSB) followed the rest of their peers and turned negative.
Fellow FTSE 100 constituents BG Group (LSE: BG) and Tullow Oil (LSE: TLW) were both down 2% on profit taking after making strong gains last week, while Petrofac (LSE: PFC) and Cairn Energy (LSE: CNE) moved down less than 1%.
Mid caps fell into the same pattern with Heritage Oil (LSE: HOIL) declining less than 1%, while Dana Petroleum (LSE: DNX) shed 3.3%. Dragon Oil (LSE: DGO) was at the bottom of the pile with a 5.3% dip.
Some of the juniors moved against the tide, posting good gains in early trade. US focused Empyrean Energy (AIM: EME) rallied 13.7% after announcing a farm-out agreement with Hilcorp Energy Co for Block B of the Sugarloaf project in Texas.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP), which is expecting its Shaikhan-1 well in the Kurdistan of northern Iraq to enter the final target depth of 3,200 and 3,500 metres as well as a report from an independent advisory firm on the previously announced discoveries in the well, climbed a further 4.7% to 89 pence per share, coming off a strong performance on Friday when it released the updates.
EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) gave away its early gains of about 3.5% to finish flat.
Latin American focused Gold Oil (LSE: GOO) moved together with the market, shedding over 8.7%, as did Ukraine operating gas producer, Regal Petroleum (AIM: RPT), which moved down 7.7%.
European focused oil and gas developer Ascent Resources (AIM: AST) and Eastern Europe operating junior Aurelian Oil & Gas (AIM: AUL) also fell, declining 5.5% and 4.8% respectively. Gulf of Mexico focused Pantheon Resources (AIM: PANR) also added over 4%.
Miners slump on lower prices
Precious metals prices slid as the US Dollar strengthened, weakening the mining sector, which switched to selling mode in early trade.
Gold was at US$999/oz, Silver retreated to US$16.76/oz and Platinum declined to US$1,313/oz.
Major mining stocks were all in decline on Monday.
Gold producers led the way with blue chip Randgold Resources (LSE: RRS) and mid cap Peter Hambro Mining (LSEL POG) each slipping 4.3%. FTSE 100 platinum miner Lonmin (LSE: LMI) lost over 3%, while silver miner Fresnillo (LSE: FRES) declined almost 3%.
Mid caps Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) were down 1.8% and 5% respectively.
Specialty chemicals firm and FTSE 100 constituent Johnson Matthey (LSE: JMAT) lost 1.4%. Yamana Gold (LSE: YAU) closed with a loss of almost 3%.
Juniors were mixed.
Australian gold and copper prospector Solomon Gold (AIM: SOLG) led the fallers, dipping 6.8%.
Uzbekistan operating gold miner Oxus Gold (AIM: OXS) followed with a 5.8% decline.
Africa focused gold deposit developer Cluff Gold (AIM: CLF) and Fijian focused gold miner Vatukoula Gold Mines (LSE: VGM) also showed up among the leading fallers, declining 5.6% and 4.8% repsectively. South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and South American focused Mariana Resources (AIM: MARL) both moved down 4.5%.
Latin American precious metals miner Mineral IRL (AIM: MIRL) and Western Australia operating Norseman Gold (AIM: NGL) lost 3% and 4% respectively.
Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and commodity asset development company Mercator Gold (AIM: MCR) headed in a different direction, both climbing 7.4%.
Base metals miners weak as copper and nickel slide
Base metals prices dropped early in the day, sending all key mining stocks falling.
Copper slid to US$2.74/pound, Nickel was down to US$7.60/pound and Zinc declined to US$0.84/pound.
Copper miner Kazakhmys (LSE: KAZ) was at the bottom of the pile with a 5% decline. Anglo-Swiss miner Xstrata (LSE: XTA) slid 4.3%.
Vedanta Resources (LSE: VED) and Rio Tinto (LSE: RIO) both shed over 3%, while Anglo American (LSE: AAL) and Antofagasta (LSE: ANTO) declined 2% and 1.5% respectively. The world’s largest miner BHP Billiton (LSE: BLT) slumped 2.8%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) declined 3.4%.
Juniors mostly rose. Tunisia focused metal miner Maghreb Minerals (AIM: MMS) was in the lead, surging 13%.
Russian focused nickel and copper miner Amur Minerals (AIM: AMC) improved 6.5% to 10.25 pence per share. Nickel laterite play Rusina Mining (AIM: RMLA) climbed 5.7%. South American focused junior miner Herencia Resources (AIM: HER) added 3.6%.
Indonesia operating coal miner Churchill Mining (AIM: CHL) was the lead faller among the juniors with a 5.5% decline. Nickel and iron ore exploration junior Landore Resources (AIM: LND) and Australian focused coking coal producer Caledon Resources (AIM: CDN) lost about 1-2%.
Banks, insurance, private equity
Partly nationalised bank Royal Bank of Scotland (LSE: RBS) emerged as one of the leading fallers in the blue chip index on media reports of a possible cash call in the range of £3 and £5 billion in order to avoid participation in the government’s asset protection scheme. The bank dipped 6.5%, further weighing on the falling financial stocks.
Another bailed out banking group Lloyds (LSE: LLOY) shed about 3.5% in sympathy. Other FTSE 100 banks Barclays (LSE: BARC) and HSBC (LSE: HSBA) declined 2% and 1.6% respectively.
Standard Chartered (LSE: STAN) lost 2.6%.
Insurers didn’t fare much better.
Prudential (LSE: PRU) shed about 2%, as did Legal & General (LSE: LGEN). Old Mutual (LSE: OML), Friends provident (LSE: FP) and RSA Insurance Group (LSE: RSA) dropped more than 1%, while Standard Life (LSE: SL) and Aviva (LSE: AV) declined marginally.
Private equity group 3i (LSE: III) finished with marginal losses.
Junior consumer and motor finance provider S & U (AIM: SUS) moved against the tide, adding about 4.4%.
Small Cap Movers
Other notable movers among the small caps included software developer smartFOCUS (AIM: STF), which rallied 7.5% and natural pesticide and parasiticide products developer TyraTech (LSE: TYR) with a 5.7% climb. Accsys Technologies PLC (AIM: AXS) rose 3.7%. Investment company Amphion Innovations (AIM: AMP) slipped 3.5%.
Large and Mid Cap News
Anglo-Swedish pharmaceutical company AstraZeneca (LSE: AZN) announced today it had entered into an exclusive worldwide license agreement with Nektar Therapeutics (NASDAQ: NKTR) for two of its drug development programmes for an upfront payment of US$125 million for both drugs.
London-headquartered diversified miner Rio Tinto (LSE, ASX: RIO) said this morning it had completed the sale of its Corumba iron ore mine in western Brazil to the world’s biggest iron ore miner Vale S.A (NYSE: RIO).
UK Commercial real estate firm Land Securities (LSE: LAND) announced the sale of its stake in Britain’s premier retail complex, the Bullring, Birmingham. British Land owned one third of the Bullring shopping centre. Investors have been relatively unmoved by the news, Land Securities shares are fairly unchanged so far on Monday morning.
Small Cap News
Amphion Innovations PLC (LSE: AMP), the developer of medical and technology businesses, has issued 273,976 shares in the company, representing 0.21 percent of the enlarged issued share capital, at 13.05 pence each, to certain board members in lieu of their directors' fees to June 2009.
Plastics products manufacturer Plastics Capital (AIM: PLA) released a trading update today, saying half year trading was in line with expectations, also expecting its full year performance to meet market expectations to send shares flying.
Australian junior diversified miner Jupiter Mines Limited (ASX: JMS) which is 25% owned by Red Rock Resources (AIM: RRR) said today its shareholders had approved an equity issue to POSCO Australia’s (POSA) worth A$7.81 million, which would give it a 13% stake in the company.
Mobile email and data synchronisation specialist Synchronica PLC (AIM: SYNC) said it won a purchase order from a mobile operator in the Middle East for an initial 100,000 user license of its mobile email product Mobile Gateway plus a contract for professional services. The initial value of the deal is US$162,000.
US operating oil and gas company Range Resources (ASX: RRS, AIM: RRL) added another project to its international portfolio with the acquisition of a 25% working interest in the North Chapman Ranch project in Texas from US based Crest Resources announced this morning.
Empyrean Energy PLC (AIM: EME) said Texas Crude Energy Inc (TCEI) has successfully farmed out Block B in the Sugarloaf project, part of the Sugarkane gas and condensate field in Texas, US.
Siberian focused oil and gas company PetroNeft Resources (AIM: PTR) said it had placed over 120 million new shares at £0.14 per share to raise US$27.5 million to fund the development programme at its License 61 project in Russia as well as cover corporate overheads.
Chinese coal bed methane business Green Dragon Gas Ltd (AIM: GDG) said the business continues to grow at a steady pace as it reported results for the first half, showing revenue increasing to US$18.7 million from US$2.4 million, with the growth coming predominately from its downstream operations.
Advanced Computer Software PLC (AIM: ASW) said results for the six months to August 31 2009 have been in line with management expectations, with its software business Adastra continuing to show strong year on year growth in revenues and profitability, as order intake rose and costs remained under tight control.
Earlier this month, Canadian based junior gold developer Rambler Metals and Mining Plc (AIM: RMM & TSX- V: RAB) announced the purchase of the Nugget Pond processing facility on the Baie Verte peninsula. Today Rambler released an update identifying a further expansion of its operations in Newfoundland, Canada.
Shares in Lighthouse Group (AIM: LGT) were in demand this morning after the financial advice and wealth management firm released its interim results, saying it had traded “at least in line with expectations” since June due to improvements in share prices and the impact of sustained low interest rates.
Westminster Group PLC (AIM: WSG) said it has been appointed by Ensco Inc as preferred UK distributor and supplier of their MicroSearch advanced heartbeat detector, which can detect humans hiding in vehicles or containers. Existing UK customers include HM Prison Service, Scottish Prison Service, and the UK Border Agency.
Technology commercialization and investment business Imperial Innovations Group (AIM: IVO) said today it had made an investment of £1.16 million in cellular therapeutics company Cell Medica to help it develop and commercialise Virus-specific Immune Reconstitution cell therapy technique, aimed at protecting patients with weakened immune systems from cytomegalovirus infections, which are a major cause of mortality in this patient group.
Indian based Animator DQ Entertainment (AIM: DQE) has announced the commissioning of a second series of the ‘Penguins of Madagascar’ series for Nickelodeon animation studios. DQE were awarded the contract to produce the CGI animated series following the quality and delivery of the first series. Investors are expected to react positively to the news which further underpins DQ’s standing among its industry partners.
Xtract Energy PLC (AIM: XTR) said its Turkish joint venture group Extrem Energy AS, in which it holds 34 percent, has re-entered the Alasehir-1 well on the Alasehir licence area and is currently preparing it for perforation and flow testing.
Israel-headquartered Amiad Filtration Systems Ltd (AIM: AFX) said it expects full year results to be in line with market expectations as it reported a slight rise in pretax for the first half to June 30 2009.