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Oil stocks mixed, Gold, Silver and Platinum retreat, banks and miners push FTSE 100 down

Published: 07:22 12 Aug 2009 AEST

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The FTSE 100 opened in the blue, lifted by strong H1 results from International Power and seemed poised to return to the positive after ending Monday in the red. But the banking sector played counterweight to the power generator and other high profile companies that opened with gains, with almost all major financial stocks putting up big losses, which kept the Footsie in the red for second day.

 

UK-based electricity producer International Power (LSE: IPR) released H1 results today, reporting a 12% improvement in operating profits, while stating that its current H2 performance is in line with board expectations, gaining 5.6%.

 

The company was the runaway leader in the top-tier index, but other companies also managed to make gains. Can maker Rexam (LSE: REX) surged again following on yesterday’s update from Credit Suisse, which said Rexam was to remain steady on stabilizing markets and set the stock price target for the company, which is currently valued at a little over 230p per share, to 300p. Rexam improved 4.5%.

 

The index was once again pushed down by the banks as RBS continued declines after reporting weak results last weak and offering a gloomy outlook for the next couple of years, while Lloyds chimed in with even bigger losses after its reportedly planned multibillion cash call, which dragged down the bank’s stock yesterday.

 

Miners flooded the top risers list in early morning, partly helped by slightly higher metal prices, yet quickly moved into the red as prices started to decline.

 

Commercial property sector was also moving downwards, further weighing on the index. The shares of Liberty International (LSE: LII), British Land Co (LSE: BLND) and Land Securities Group (LSE: LAND) switched to the selling mode today, dipping 5.5%, 5.7% and 4.6% respectively.

 

Commodities.

 

Gold gave up on early gains, slipping further down to US$942/oz. Other precious metals also retreated. Silver gave up US$0.10, falling to US$14.24/oz. Platinum slipped to US$1,237/ounce.

 

Base metals did slightly better. Copper was stable at US$2.75/pound, Zinc also stabilised US$0.81/pound.  Nickel added US$0.10, improving to US$9.07/pound.

 

Oil and gas sector mixed, prices head south

 

Oil prices retreated, pulling back the oil sector which started the day in the positive. Brent crude shed more than US$1, moving down to US$72, while NYMEX crude dipped below US$70.

 

Oil companies were mixed. BP (LSE: BP) gave up early gains and landed just below the opening level at the end of the day. Shell (LSE: RDSB) tacked on less than 1%. Oil and gas player BG Group (LSE: BG) shed some 2%, moving below 1,000p per share again.

 

Mid-tier oil companies also were mixed. Cairn Energy (LSE: CNE) turned small gains into small losses by the end of the day, while Dragon Oil (LSE: DGO) improved marginally. Tullow Oil (LSE: TLW) did not show much movement, upping less than 1%. Dana Petroleum (LSE: DNX) was flat.

 

Oil juniors again were more volatile. US focused Empyrean Energy (AIM: EME) rose over 5% in the morning, but then dipped over 7%, landing 2% in the red. Latin America oil producer and explorer, Gold Oil rose 4%, while Syria and Gulf of Mexico oil and gas producer Gulfsands Petroleum (AIM: GPX) rose 2% to 193p per share. North Sea focused oil company Xcite Energy (LSE: XEL) jumped 13%.

 

Northern Petroleum (AIM: NOP) slipped 3.8% despite entering the AIM 50; Kazakhstan-focused Max Petroleum (AIM: MXP) also made good gains in the morning, but finished 1% down. European focused oil and gas exploration company Ascent Resources (AIM: AST) added 3%.

 

Precious Metal Companies in the red

 

Precious metal companies were largely unmoved in the morning, mostly posting marginal gains. Yet the sector commenced downward movement in the afternoon with most companies ending the day with losses. Aquarius Platinum (LSE: AQP) dipped 1.6%, moving down to 269p per share. Johnson Matthey (LSE: JMAT) also lost over 1%, while Lonmin (LSE: LMI) retreated 3.8%.

 

Gold producers also were in decline. Peter Hambro Mining (LSE: POG) and Randgold Resources (LSE: RRS) both dipped about 1%.

 

Silver producer and FTSE 100 constituent Fresnillo (LSE: FRES) continued to fall, losing 4.7%, while FTSE 250 silver miner Hochschild Mining (LSE: HOC) followed with a 3.3% loss.

 

Other noteworthy movers among juniors included Kryso Resources (AIM: KYS), which erased Monday’s losses with a 14% hike on news that it had brought in a new engineering firm to complete a bank feasibility study at the Pakrut Gold Project. Plenty of other gold juniors put in a solid performance too, including Mercator Gold (AIM: MCR) which jumped 23%, while gold extraction specialist Goldplat (AIM: GDP) upped over 5%.

 

Base metal miners decline

 

Majors Anglo American (LSE: AAL), Rio Tinto (LSE: RIO) and BHP Billiton (LSE: BLT) retreated 2.5% and 1.7%. Fellow miner Xstrata (LSE: XTA) was in for heavier losses, slipping 4.4%.

 

Copper miners also ended up on the losing side. Vedanta Resources (LSE: VED) and Antofagasta (LSE: ANTO) were both down 2.3%. Kazakhmys (LSE: KAZ) dipped 5.2%.

 

London’s only listed pure iron ore producer, Ferrexpo (LSE: FXPO) dipped 4.6%.

 

Nickel and iron ore exploration junior Landore Resources (LSE: LND) climbed slightly, up 1.4%, while laterite nickel specialist, European Nickel (AIM: ENK) slipped into the red after an early gain, moving down 2.7%.  Zinc focused Herencia Resources (AIM: HER) jumped 15%.

 

Uranium miner Kalahari Minerals (AIM: KAH) lost 6%, while mineral sands producer Kenmare Resources (LSE: KMR) dipped 6.7%.

 

Shares in junior miner Noventa (AIM: NVTA) were down 8% by the end of the day, but diversified mining junior Regency Mines (AIM: RGM) rose 2.6%.

 

Insurance, banks, private equity

 

Financial stocks performed poorly in the morning, dragged down by the considerable losses put up by Royal Bank of Scotland and Lloyds, which is reported to be mulling a multibillion cash call. Life insurer Friends Provident outperformed the sector after accepting an improved takeover offer from resolution.

 

RBS (LSE: RBS) continued its freefall, slipping a further 4%, while Lloyds (LSE: LLOY) retreated 6.5%. Barclays (LSE: BARC) and HSBC (LSE: HSBA) also couldn’t hold on to the opening levels as both dipped over 1.5%. Standard Chartered (LSE: STAN) outperformed the sector, declining marginally.

 

Friends Provident (LSE: FP) rose after agreeing to a £1.86 billion takeover offer from Resolution, but moved in the same direction as the rest of the market, slipping over 1%. Aviva (LSE: AV) sank 5%, while RSA Insurance Group (LSE: RSA) pulled back 2.7%. Old Mutual (LSE: OML), Legal & General (LSE: LGEN) and Prudential (LSE: PRU) also were in decline, dipping 5.1%, 4% and 3.5% respectively. Standard Life (LSE: SL) declined a little over 1%.

 

Small Cap Movers

 

Notable movers among juniors included environmental science and technology company Accsys Technologies (AIM: AXS) with a 10% gain, medical technology company Biocompatibles International (AIM: BII), which added 3%. Software developer smartFOCUS (AIM: STF) retreated 2.4%, while vaccine specialist Lipoxen (AIM: LPX) added 7.8%. Investment fund LonZim (AIM: LZM) climbed 2%. African investment company Lonrho (AIM: LONR) dipped 6.5% after raising US$4.2 million through issuing 35.3 million new shares to a fund controlled by Altima Partners LLP at an 8% discount to yesterday’s closing price to fund the acquisition of a 51% stake in African fruit and vegetable company Rollex.

 

Large Cap News

 

International Power PLC (LSE: IPR) reported a 12 percent rise in operating profit for the first half, or 2 percent at constant currencies, saying the business continues to perform in line with board expectations in the second half, has strong corporate liquidity and is well placed for the future. Profit from operations before exceptional items for the six months ended June 30 2009 rose to £555 million from £495 million a year earlier, on revenue that rose to £2.69 billion from a restated £1.73 billion. Pretax profit before exceptionals rose to £339 million from 313 million, and the group is raising the interim dividend by 19 percent to 4.25 pence a share.

 

Friends Provident (LSE: FP) has agreed to an improved takeover proposal from insurance buyout fund Resolution Ltd, accepting a £1.86 billion all-share offer, which it has recommended to shareholders. The offer values Friends Provident at 79.4p per share, a premium of over 4p to its Monday’s closing price, or 0.9 Resolution shares for each share in Friends. There will also be a cash alternative for the first 2,500 shares for smaller shareholders, worth up to £500 million.

BP Plc (LSE: BP) and nutritional products developer Martek Biosciences Corporation (NASDAQ: MATK) teamed up to work on the production of microbial oils for biofuel applications to allow the conversion of sugar into biodiesel, the companies said today in a joint statement.

 

The oil & gas major will dish out up to US$10 million to fund the initial phase of research and development, to be conducted by the Maryland-headquartered Martek.

Small and Mid Cap News

 

TomCo Energy PLC (AIM: TOM) said its listing on AIM will be cancelled as of tomorrow, August12, in line with LSE rules, following its request in February that its shares be temporarily suspended pending clarification of its financial position. It will continue to investigate appropriate corporate opportunities and will continue to investigate possibilities for the development of the company's oil shale asset in Utah, US, with the intention of relisting an enlarged entity on AIM.

 

Shares in Kryso Resources (AIM: KYS) jumped 11% this morning after the company said it had appointed Beijing General Research Institute of Mining & Metallurgy (‘BGRIMM’) to complete the all important bankable feasibility study at the Pakrut Gold Project in Tajikistan. The Pakrut gold project is Kryso Resources flagship asset, which sits at the centre of a large licence area of some 6,300 hectares, alongside a number of other smaller mineralised systems. Currently hosting 2 million ounces of gold, over half of which is JORC compliant measured and indicated resources.

 

Maintenance and building group Interserve (LSE: IRV) said profits and revenues both grew strongly in the first half, while outlook for near-term performance was robust.In its half-yearly report released today, Interserve said pre-tax profits were up 18.7% to £40 million on revenue of £951.2 million, a 4.1% year on year increase. Earnings per share upped 19.7% to 23.1p. The company has also improved its financial position, slashing the net debt 26.3% to £85.1 million.

 

Home credit and motor finance specialist, S & U PLC (LSE: SUS) confirmed this morning that trading for the six month period ended 31 July 2009 was in line with market expectations.  Current trading and profitability at its home credit division remains “very satisfactory”, despite a cautious sales and underwriting environment.  The company reported that home credit was witnessing improved profitability thanks to better collections and lower impairments compared to last year.


Nexus Management PLC (AIM: NXS) said its wholly owned subsidiary Resilience Technology Corp has launched its new corporate network security product, the '9100 Small Appliance for High Security Requirements'. This appliance allows organisations to ensure high levels of security, compliant with corporate standards, but at a much lower cost compared to products currently available in the market, it said.

 

Shares in Mobile Streams PLC (AIM: MOS) were lifted this morning by news the company has opened a new Center of Excellence for Smartphone research and development in Hong Kong.

 

The mobile content retailer said the new facility will play a key role in the company's continuing development of Smartphone and feature phone applications and services on behalf of both Mobile Streams and its customers.

 

Oil and gas company Northern Petroleum (AIM: NOP), until recently a AIM 100 constituent, announced today it has been promoted to the FTSE AIM 50 Index after closing at £1.30p on Monday to reach a market capitalization of £102.6 million. The company’s share price has outperformed the AIM All-Share Index by 36% and the AIM Oil and Gas Index by 48% over the year to 10 August, helped by acquisitions,  an improved outlook for its operations in the Netherlands, and a joint venture with Shell (LSE: RDBS) over its offshore acreage near Sicily.

 

Serica Energy PLC (AIM, TSX-V: SQZ) said gas sales have commenced from the Kambuna field offshore Sumatra, Indonesia, providing the company with its first significant production revenue from its 50 percent working interest in the field. Salamander Energy PLC (LSE: SMDR) holds the other 50 percent and operates the field. Following the mechanical completion and commissioning of all facilities, initial production began from the Kambuna-4 well, which was opened up on August 5, delivering gas and condensate to the onshore receiving facilities at Pangkalan Brandan, North Sumatra. Commercial sales began on August 11, with gas being introduced to the pipeline system for transportation to the Belawan power plant.

 

Egdon Resources PLC (AIM: EDR) said production has started from its Kirklington oil field in Nottinghamshire. The news lifted its shares by more than 11 percent in London trade just before midday. Following a period of commissioning and testing, the Kirklington-2 well was returned to continuous pumped production at the end of July 2009. As at August 7 2009, the well had produced a total of 325 barrels of oil at an average daily rate of 32 barrels, the company said.

 

Shares in Inspired Gaming Group PLC (AIM: INGG) soared after the company announced a new gaming machines supply contract with motorway services operator Moto Hospitality.

 

Under the deal, Inspired will supply 700 machines on a revenue share basis for Moto’s estate of 45 service stations throughout the UK. Financial details were not disclosed. Inspired was more than 16 percent higher in early afternoon trade, shortly after the news broke.

 

Australia-based Rheochem PLC (AIM: RHEP; ASX: RHE) said it won a contract to supply drilling fluids and related services to a subsidiary of Origin Energy Ltd (ASX: ORG) for its conventional onshore drilling campaign in the North Perth Basin near Dongara, Western Australia.

 

The contract is for two firm wells being drilled by Origin Energy Resources, with the potential for a further two wells contingent on drilling results. Financial details were not disclosed.

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