Overview: the FTSE 100 rallied today, driven by gains in the mining and energy sector after oil and metal prices advanced as the US dollar weakened on Australia’s decision to hike interest rates.
Australia’s Reserve Bank upped its rates from 4.5% to 4.75%. The Reserve Bank of India made a similar move, raising its repurchase rate to 6.25%.
The Reserve Bank of Australia added fuel to the fire when it commented that concerns over the slowing Chinese growth have lessened, giving yet more support to oil and raw materials as China is the world’s second largest energy consumer and the main customer for the main base metals.
The FTSE 100 stood 1.2% above the opening level in the last hour of trading.
Oil and gas producer Tullow Oil (LON:TLW) led the blue chips with a 4.2% advance. Construction equipment manufacturer Wolseley (LON:WOS) and copper miner Kazakhmys (LON:KAZ) followed, tacking on 3.7% and 3.4% respectively. Another mining major Antofagasta (LON:ANTO) advanced 3.1%.
Bank Lloyds (LON:LLOY) and business services company Serco Group (LON:SRP) were at the bottom of the pile with losses of 3.5%. Clothing retailer Next (LON:NXT) declined 1.7%. Tour operator TUI Travel (LON:TT) and chipmaker ARM Holdings (LON:ARM) declined 1.4%. Engineering company Smiths Group (LON:SMIN) was down 1%.
US stocks were off to a positive start with the Dow Jones and S&P 500 indexes advancing 0.6%. The technology heavy NASDAQ composite rose 0.75%.
Commodities
Oil prices were headed north today with Brent Crude futures topping the US$85/barrel plateau after the US dollar declined to make the dollar-denominated crude cheaper for holders of other currencies to lift demand.
US light, sweet crude for December delivery rose to US$83.65/barrel, while January crude last traded at US$84.37/barrel on the New York Mercantile Exchange (NYMEX).
December Brent Crude climbed to US$85.19/barrel on the ICE Exchange, while Brent for January delivery US$85.46/barrel.
Supermajors BP (LON:BP) and Shell (LON:RDSB) climbed 1.2% and 2.6% respectively, while Tullow Oil (LON:TLW) and BG Group (LON:BG) advanced 4.2% and 2.8% .
Cairn Energy (LON:CNE) held steady.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) rose marginally.
Melrose Resources (LON:MRS) led the midcaps with a 1.6% advance. Soco International (LON:SIA) followed with a 1.35% gain. Dragon Oil (LON:DGO) and Premier Oil (LON:PMO) posted small gains, while Heritage Oil (LON:HOIL) and JKX Oil & Gas (LON:JKX) declined marginally.
Salamander Energy (LON:SMDR) held steady.
Oil and gas explorer and producer focused on the Kurdistan region of northern Iraq, Gulf Keystone Petroleum (LON:GKP) was among the leading risers in the sector, advancing more than 13%.
Oil and gas exploration company focused on the Middle East-North Africa (MENA) and Mediterranean region Petroceltic International (LON:PCI), which today appointed Tom Hickey as Corporate Development Director, also did well, rising 4.5%.
Gold rises to $1,353
Gold prices edged higher today, driven by weakness in the US dollar and increased safe haven demand ahead of today’s policy meeting of the Federal Reserve and US elections.
Gold last traded at US$1,353/oz, while silver and platinum rose to US$24.77/oz and US$1,714/oz respectively.
Platinum miner Lonmin (LON:LMI) and silver miner Fresnillo (LON:FRES) climbed 1.7% and 1.4% respectively. Gold producer Randgold Resources (LON:RRS) tacked on 1%, while peer African Barrick Gold (LON:ABG) declined marginally.
In the FTSE 250, Aquarius Platinum (LON:AQP) advanced 1.7% and silver producer Hochschild Mining (LON:HOC) posted a small gain.
Gold miner Petropavlovsk (LON:POG) moved in the opposite direction, slipping 3%.
African Aura Mining (LON:AAAM, TSX:AUR), which is focused on the development of gold and iron-ore deposits in sub-Saharan Africa, and Latin America focused gold producer and explorer Orosur Mining (LON:OMI, TSX-V:OMI) were among the top performing small caps with gains of 7.5%.
Base metals rise
Copper and nickel rose to US$3.80/lb and US$10.54/lb, while zinc held steady at US$1.094/lb.
Kazakhmys (LON:KAZ) led the base metal miners with a 3.4% advance. Antofagasta (LON:ANTO) and Xstrata (LON:XTA) added about 3%. BHP Billiton (LON:BLT) followed with a 1.8% climb. Anglo American (LON:AAL) and Rio Tinto (LON:RIO) each tacked on 1.65%.
Eurasian Natural Resources (LON:ENRC) rose 1.1%.
Vedanta Resources (LON:VED) went against the tide, posting a small loss.
London’s only listed pure iron ore producer and FTSE 250 constituent Ferrexpo (LON:FXPO) was little moved.
Churchill Mining (LON:CHL), which focuses on the East Kutai thermal coal project in Indonesia, iron ore trader Prosperity Minerals Holdings (LON:PMHL) and gold and base metals explorer Thor Mining (LON:THR) were among the top riders among the small caps with gains of over 5%.
Banks, insurance, private equity
Part-nationalised banks Lloyds (LON:LLOY) and Royal Bank of Scotland (LON:RBS) lost 3.5% and 1% respectively. Standard Chartered (LON:STAN) and HSBC (LON:HSBA) did better, adding just over 1%. Barclays (LON:BARC) rose marginally.
Most insurance companies were on the rise. Admiral Group (LON:ADM) and RSA Insurance Group (LON:RSA) climbed 2%. Aviva (LON:AV) and Standard Life (LON:SL) each added 1.5% ad Old Mutual (LON:OML) tacked on 1%.
Legal & General (LON:LGEN) and Prudential (LON:PRU) declined marginally.
Small Cap Movers
Other notable movers among the small caps included Zimbabwe and Mozambique focused investor LonZim (LON:LZM), which rallied 9%.
Small Cap News
The oil and gas exploration firm Petroceltic (LON:PCI) has underlined its desire to grow the business by appointing one of the sector’s leading dealmakers as corporate development director. He is Tom Hickey, who was previously chief financial officer of Tullow Oil (LON:TLW).
African Aura Mining (TSX:AUR, LON:AAAM) shares rose nearly 8 percent to trade at 160 pence in early afternoon London deals, following encouraging trenching results from the Ndablama gold prospect in western Liberia. So far data from the Bea Mountain licence area has suggested the potential for a significant new gold province.
Ascent Resources PLC (LON:AST) has appointed Scott Richardson Brown as a non-executive director with immediate effect. He will take over as finance director on January 4 2011, replacing Simon Cunningham who is relocating to Australia.
Mariana Resources (LON:MARL) has commenced the second round of drilling at the Calandria Norte gold-silver target after successfully completing drilling at Calandria Sur ahead of schedule.
The closely followed drilling campaign in the Falklands has suffered another setback today after Desire Petroleum (LON:DES) said it would plug and abandon the 14/15-1Z sidetrack well on the Rachel prospect. Desire Petroleum shares defied the apparent failure in the latest Falklands exploration well, with a 15 percent gain.
Shares in Hydro International (LON:HYD) surged 20% this morning after the water control and treatment specialist won a £15.6 million contract for its Zickert Sludge Scraper technology.
In a fourth quarter trading update, Africa-focused investment company Lonrho (LON:LONR) reported strong growth in the quarter and the full year to end-September 2010, moving into profit for both periods.
Strategic Natural Resources PLC (LON:SNRP) has appointed Edward Cox as new finance director with immediate effect to succeed Elizabeth Shaw whose departure was announced only yesterday.
Large and Mid Cap News
Ferrexpo (LON:FXPO) has increased production significantly year-on-year, with more than 15 percent more iron pellets being produced in the year to date. In a monthly production update Ferrexpo said that October had the second highest production of 2010, with 891,000 tonnes of iron pellets produced.