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Copper and Nickel drop to weak miners, push FTSE 100 down

Published: 21:55 24 Sep 2009 AEST

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Overview: the FTSE 100 expectedly started lower after a weak finish on Wall Street on Wednesday as the Dow Jones industrial average closed 80 points down following the Fed’s report, which said interest rates would remain very low for a long period of time and purchases of mortgage-back securities would slow down. US futures rose this morning ahead of the G20 meeting in Pittsburgh, limiting the Footsie’s losses to just 8 points. Oil prices inched lower, while metals were mixed with gold, silver and platinum rising, while copper and nickel slid to weaken the sector, which was flat in early trade, not having much of an impact on the blue chip index.

Software manufacturer Autonomy Corporation (LSE: AU) took the lead, climbing 3.3%, while tour operator Carnival (LSE: CCL) and insurer Old Mutual (LSE: OML) followed with gains of 3.2% and 3%. Broadcaster BSkyB (LSE: BSY) also was in buying mode, rising 2.2%.

London Stock Exchange Group (LSE: LSE) declined 4.3% after reporting lower trading volumes and announcing job cuts. Private equity group 3i (LS:E III) and airline British Airways (LSE: BAY) followed with losses of over 3%. Packaging company Rexam (LSE: REX) lost 2.6%, while heating, plumbing and construction materials supplier Wolseley (LSE: WOS) dropped 3.1%.

Commodities

Oil inched lower today with November light, sweet crude sliding to US$68.7/barrel, while Brent Crude for November delivery traded at US$67.5/barrel.

With the exception of supermajors BP (LSE: BP) and Shell (LSE: RDSB), which rose marginally, major oil stocks were in decline this morning.

BG Group (LSE: BG) shed a further 1%, moving down to 1,093 pence per share. Tullow Oil (LSE: TLW) also lost about 1%. Other FTSE 100 constituents Petrofac (LSE: PFC) and Cairn Energy (LSE: CNE) were sitting slightly below the opening level at midday.

In the FTSE 250, Dana Petroleum (LSE: DNX) and Heritage Oil (LSE: HOIL) declined less than 1%, while Dragon Oil (LSE: DGO) slumped 2.4%.

Russian focused oil and gas producer Volga Gas (LSE: VGAS) led the juniors, rising over 10%. Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) climbed 3.3%.

Other small cap oil and gas producers moved with the market, slipping into the negative.

Latin American focused Gold Oil (LSE: GOO) led the fallers with a 6% slide after releasing an operational update for its Blocks Rosa Blanca and Azar in Colombia. Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) both lost 3%, while US focused junior Empyrean Energy (AIM: EME) declined almost 4%.

Eastern European focused junior Aurelian Oil & Gas (AIM: AUL) was another notable faller, moving down 2.9% in the morning.

FTSE 100 miners climb on higher gold and silver

Precious metals prices improved form yesterday’s levels, lifting large cap miners in early trade. Gold edged higher to US$1,013/oz, while Silver improved to US$16.76/oz. Platinum was at US$1,321/oz.

While large cap miners all rose this morning, albeit not moving up by that much, their sector peers from the FTSE 250 were in decline.

Silver producer Fresnillo (LSE: FRES) was in the lead with a 1.4% gain, while gold miner Randgold Resources (LSE: RRS) followed with an almost identical gain of 1.3%. Platinum miner Lonmin (LSE: LMI) rose marginally.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) lost less than 1%. Yamana Gold (LSE: YAU) was down 1.9%.

In the FTSE 250, gold producer Petropavlovsk PLC (LSE: POG), which was known as Peter Hambro Mining until this morning, slid 1.2%. Aquarius Platinum (LSE: AQP) declined 1.4%, while mid cap silver producer Hochschild Mining (LSE: HOC) declined 2.7%.

UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) was the leading riser among the juniors, climbing 6.8%. Iran operating Persian Gold (AIM: PNG) followed with a 5.2% gain, while diamond miner with assets in Sierra Leone and Guinea, West African Diamonds (AIM: WAD) advanced 3.7%.

Argentina operating gold explorer Patagonia Gold (AIM: PGD) led the fallers with a 7.4% dip. Platmin (TSX, AIM: PPN) lost 4.3%. African focused gold deposit developer Cluff Gold (AIM: CLF), copper and gold miner EMED Mining (AIM: EMED), South Africa and Botswana operating diamond miner Firestone Diamonds (AIM: FDI) and Western Australia operating Norseman Gold (AIM: NGL) all lost over 3%.

Copper and Nickel slide to weaken sector

Base metals declined with Copper sliding to US$2.73/pound and Nickel moving down to US$7.92/pound. Zinc held steady at US$0.85/pound.

Mining stocks were mixed this morning. Vedanta Resources (LSE: VED) was in the lead with a 1.5% gain. Anglo American (LSE: AAL), Xstrata (LSE: XTA) and Rio Tinto (LSE: RIO) all posted small gains in the morning.

BHP Billiton (LSE: BLT) declined marginally, as did Chilean miner Antofagasta (LSE: ANTO), while fellow copper producer Kazakhmys (LSE: KAZ) was flat.

Mozambique operating tantalum producer Noventa (AIM: NVTA), which did not release any significant news today, soared 37% to emerge as the leading riser among the small caps. Russian focused copper and nickel producer Amur Minerals (AIM: AMC) climbed 4.2%, while Indonesia operating coal miner Churchill Mining (AIM: CHL) added 3.7%.

Iron ore focused investor Red Rock Resources (AIM: RRR) was the leading faller with a 9% slip. Nickel laterite play Rusina Mining (AIM: RMLA) and mineral sands producer Kenmare Resources (LSE: KMR) both shed over 3%, while Zinc mining and recycling specialist ZincOX (AIM: ZOX) declined 4%.

Banks, insurance, private equity

Partly nationalised banks Lloyds (LSEL LLOY) and Royal Bank of Scotland (LSE: RBS) posted marginal gains, while Barclays (LSE: BARC) added 1%. Other major banking groups HSBC (LSE: HSBA) and Standard Chartered (LSE: STAN) were in decline, with the latter moving down 1.5%.

Insurer Old Mutual (LSE: OML) performed well, rising 3.5%, while sector peers Aviva (LSE: AV) and Friends Provident (LSE: FP) posted marginal gains. Prudential (LSE: PRU) and Standard Life (LSE: SL) were just below the opening level, while Legal & General (LSE: LGEN) and RSA Insurance Group (LSE: RSA) were flat.
Private equity group 3i (LSE: III) declined 3%.

Home credit and motor finance specialist S & U PLC (LSE: SUS) outperformed the sector, climbing 7.4% on impressive interim results, released this morning.

Large and Mid Cap News

Global Defence company BAE Systems (LSE: BA) announced an agreement to acquire VT Group (LSE: VTG) 45% stake in their BVT Surface Fleet joint venture. BAE will pay VT Group £346 million for its shareholding, and will subsequently become the sole owner of the venture.

Small Cap News

Xtract Energy PLC (AIM: XTR) said it has sold the remaining 2,9 percent stake it held in  investee company Wasabi Energy Ltd (ASX: WAS), in line with its policy to increase focus on its oil and gas assets to build a portfolio with near term production combined with significant longer term potential.

Marketing software manufacturer smartFOCUS (LSE: STF) performed very well in the first half of the year, turning losses into profits as revenues increased due to a larger customer base, beefed up by new high profile clients in Europe and abroad.

London-headquartered oil and gas company Leni Gas & Oil (AIM: LGO) released a production update today, saying its monthly production levels remained roughly unchanged in August, standing at 16,103 barrels of oil equivalent (boe), or 534 boepd (barrels of oil equivalent per day) on average, compared to 16,392 boe in July.

UK sport and leisure retailer JJB Sports Plc (LSE: JJB) announced its interim results for the 26 weeks ended 26 July 2009, reflecting the tough trading conditions. JJB swung to a adjusted operating loss in the period £42.5m in the first half of the year compared to a small profit (£2m) in 2008. Shares in JJB Sports fell 13% to trade around 35p per share this morning as investors digested the latest update from one of UK’s worst hit retailers.

Medicsight PLC (AIM: MDST), specialised in Computer-Aided Detection (CAD) and image analysis software which assists in the early detection and diagnosis of disease, said the  Therapeutic Products Directorate of Health Canada  has approved marketing of the group’s MedicRead 3.0 Colon advanced 3D visualisation workstation, incorporating ColonCAD 4.0 software.

EMED Mining (AIM: EMED) released its interim report today, saying its H1 losses narrowed as exploration expenses decreased, while the company has made further progress in bringing its gold and copper projects towards production.

Gemstone producer and explorer Gemfields PLC (AIM: GEM) said it was notified by New York based hedge fund sponsors QVT Financial LP that it bought approximately 8.2m shares in the group via shareholdings of QVT Fund LP, Quintessence Fund LP and Deutsche Bank AG, raising its stake to 7.87 percent.

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