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De Beers disappoints Anglo American, FTSE 100 poised to keep winning streak alive

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After 9 days of gains, the FTSE 100 was projected to undergo a correction and open with losses. It did just that by slipping 19 points, yet quickly recovered and was up 30 points by midday.

 

The tone was set by mobile network operator Vodafone (LSE: VOD), which reported a 9.3% increase in revenue for the quarter ending in June. Vodafone Group started off with a gain of 2.7%. Mobile Telecommunications were among the top performing sectors today, going up by 60 points.

 

Utilities continued tumbling on the heels of yesterday’s proposals from regulator Ofwat, aimed at cutting the average water bill by as much as £14 between 2010 and 2015. Yesterday’s leading fallers Severn Trent (LSE: SVT) and Pennon Group (LSE: PNN) were on decline this morning, losing 1.1% and 4.5% respectively. United Utilities (LSE: UU.) lost more than 5% on Thursday, but opened flat today after saying current trading was in line with the company’s expectations.

 

Commodities

 

After testing USD 960/ounce yesterday, gold retreated to close at USD 948/ounce on Thursday. The yellow metal rebounded this morning, climbing to USD 952/ounce in early deals. Silver remained unmoved at USD 13.7/ounce, while platinum stayed at USD 1175/ounce after rising slightly from USD 1173/ounce yesterday.

 

Copper rose marginally to USD 2.50/pound, zinc was at USD 0.76/pound, while nickel went up to USD 7.45/pound. Brent Crude closed at USD 69/barrel.

 

After a few volatile days, miners did not see much movement with only a few exceptions.

 

Platinum miner Lonmin (LSE: LMI) climbed 1.8%, improving to 1209p. Aquarius Platinum (LSE: AQP) continued rallying, going up to 238p, a 2.9% improvement from Thursday. Johnson Matthey (LSE: JMAT) rose insignificantly, reaching 1289p.

 

Gold and silver producers started the day with declines. Randgold Resources (LSE: RRS) slipped 1.2%, Peter Hambro Mining (LSE: POG) suffered insignificant losses and Yamana Gold (LSE: YAU) stayed flat.

 

Junior Gold companies mostly opened flat. Oxus Gold (AIM: OXS), Kryso Resources (AIM: KYS), Patagonia Gold (AIM: PGD) and Pan African Resources (AIM: PAF) were flat, while Medusa Mining (AIM & ASX: MML) added 1%. Cluff Gold (AIM & TSX: CLF) fell less than 1%.

 

After making significant gains yesterday, silver producer Fresnillo (LSE: FRES) underwent a slight correction slipping by 1.6%. Hochschild Mining (LSE: HOC) continued making gains with a 1.2% increase.

 

One of the leading newsmakers of this week BHP Billiton (LSE: BLT) was flat as was coal and base metals miner Xstrata (LSE: XTA). Anglo American (LSE: AAL) declined by just a little over 1%, while Rio Tinto (LSE: RIO) gained a little over 1%.

 

Copper miners were once again on the rise this morning, yet came well short of matching Thursday’s progress. Vedanta (LSE: VED), Kazakhmys (LSE: KAZ) and Antofagasta (LSE: ANTO) gained 1.3%, 2.5% and 2.5% respectively. First Quantum Minerals (LSE & TSX: FQM) held steady.

 

Thursday’s leader Eurasian Natural Resources (LSE: ENRC) also opened flat.

 

BP (LSE: BP.) saw its stock surge 1.2% this morning after news of positive development in Iraq, where a BP-led group is trying to work out a deal to develop Iraq’s largest oilfield.  Shell (LSE: RDSB) also added 1.2%.


Cairn Energy (LSE: CNE) followed the trend set by oil majors and added 1.2%. Dragon Oil (LSE: DGO) was little moved after yesterday’s gains. Dana Petroleum (LSE: DNX) was up 1.4%.

 

Insurance, banks, private equity rise

 

Banks and financial shares rose for the second straight day after tumbling earlier in the week. The European Commission outlined its approach towards banks that have received state support, saying they should shoulder some of the restructuring costs and must become viable without being supported by government funds within 5 years. The remarks were directed at Lloyds Group and the Royal Bank of Scotland, as both have received state support in the aftermath of the financial crisis.

 

Lloyds and RBS both posted gains, as did other major banks and insurance stocks.

 

Lloyds Group (LSE: LLOY) was up 3.7%, while RBS (LSE: RBS) gained 3.1% and HSBC (LSE: HSBA) added 3.2%. Barclays (LSE: BARC) posted a gain of 3.2%, while Standard Chartered (LSE: STAN) climbed 3.9%.

 

Insurance groups. Legal & General (LSE: LGEN) and Prudential (LSE: PRU) were both up this morning, gaining 3.1% and 1.5% respectively. Aviva (LSE: AV.) did not show much movement adding less than 1%. Old Mutual (LSE: OML) was up 1%.

 

Private equity group 3i (LSE: III) rose 1.6% this morning after adding as much the day before.

 

Large Cap News

 

Vodafone Group (LSE: VOD) said it is trading in line with the management's outlook issued in May 2009 for the current financial year as it reported a 9.3 percent rise in group revenue for the first quarter to £10.7 billion. It confirmed the guidance for the current financial year.

 

United Utilities Group (LSE: UU) said current trading is in line with the group's expectations of delivering a sound underlying financial performance in 2009/10 and expects to grow dividends for the year by 5 percent.

 

Defence and support services company VT Group (LSE: VTG) has announced it reached an agreement to extend existing support contracts with the UK Government.

 

The extended deals include an engineering and framework contract with a government agency, which will run for 5 more years until 2015 after an option was exercised. Training and soft facilities management deals of VT’s Flagship training business with the Royal Navy were prolonged from June 2011 to December 2011 and April 2013 respectively.

 

A consortium including funds advised by CVC Capital Partners and interests of the Cosmen family confirmed this morning that they had made an indicative proposal to acquire bus, rail and coach operator National Express Group (LSE: NEX) for cash.

 

The price of the offer was not disclosed, and CVC Capital Partners were keen to stress that there could be no certainty that any offer would be made.

 

De Beers SA, in which Anglo American PLC (LSE: AAL) is the majority shareholder with 45 percent, reported a drop in sales and profits for the first half, but stressed it remained profitable during the period  in spite of extremely difficult trading conditions, particularly in the first quarter, and that it has seen an upturn in the second quarter.

 

Pretax profit before finance charges fell to US$140 million in the six months to June 30 2009 from US$662 million a year earlier and EBITDA was down at US$297 million compared to US$831 million.

Small Cap News

 

Avocet Mining (LSE: AVM) was little changed in early trading after releasing a first quarter update for the three month period ended June 30, 2009.   The junior gold producer reported first quarter gold production of 27,563 ounces, up 1% on the previous quarter.  Total cash costs before adjustment for deferred stripping fell 2% compared to the previous quarter to US$597/ounce.

 

Exploration and production company Victoria Oil & Gas (AIM: VOG) said today it has wrapped up the second tranche of equity placing it announced in June. Victoria has placed 76,625,000 new ordinary shares through Fox-Davies Capital Limited to add £2.3 million before expenses to the initial placing of £3 million, which was announced on the same day as the second tranche.

 

Mongolia-focused oil explorer Petro Matad (AIM: MATD) has narrowed losses and increased revenues in the first half to end-June 2009, and envisages commencing a three well drill programme in the 2009 drill season.

 

In its interim results statement, the company said the immediate priority is the drilling of exploration wells in Block XX, specifically on the Davsan Tolgoi prospect. As soon as satisfactory funding has been assessed and finalised, the drilling programme will commence.

 

TXO PLC (AIM: TXO) said TOGS Energy Inc, its wholly owned Texas oil and gas company with interests in 348 wells, has entered into a joint venture agreement with Endeavor Power Corp (OTCBB:EDVP).

 

This joint venture calls for the continued reworking, further development and completion of six wells in the Randle Fair Christian Lease located in Gregg County, Texas. All lease operations will be conducted by M-C Production & Drilling Co Inc.

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