Overview: just as was expected, the FTSE 100 rose 0.5% in the morning, bolstered by a strong performance from oil & gas stocks following a sharp overnight increase in oil prices due to declines in US gasoline inventories. At the same time, metal prices declined, dragging down the mining sector and keeping the Footsie’s gains at a relatively low level. The markets also got hit by FTSE 250 constituent National Express (LSE: NEX), which plummeted 25% after private equity group CVC and the Cosmen family walked away form their bid for the company, facing the put up or shut up deadline imposed by the Takeover Panel.
Supermarket chain Sainsbury’s (LSE: SBRY), which has been strong on takeover speculation, declined 3% on profit taking today to emerge as the leading faller in the blue chip index this morning. Silver miner Fresnillo (LSE: FRES) was the only other FTSE 100 constituent to lose more than 2%, pushed down by the declines in the silver price.
Stock index futures rose in the US following yesterday’s upbeat results from Google (NYSE: GOOG) and IBM (NYSE: IBM), which further strengthened the sentiment. Later on, all eyes will be on General Electric (LSE: GE), Bank of America (LSE: BAC) and Halliburton (LSE: HAL), which are set to release their Q3 results in pre-trade.
Commodities
Oil prices wereon the rise with December Brent Crude reaching US$76/barrel, while US light, sweet crude for November delivery climbed to US$77.51/barrel.
Major oil and gas stocks were on the rise after getting a boost from the increase in oil prices.
BP (LSE: BP) and Shell (LS: RDSB) both added about 2%, as did fellow FTSE 100 constituents Cairn Energy (LSE: CNE) and BG Group (LSE: BG). Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) both climbed more than 2.5%.
Midcaps also performed well with Dana Petroleum (LSE: DNX) rising 3.2%, while Dragon Oil (LSE: DGO) added 3.7%. Heritage Oil (LSE: HOIL) lagged behind with marginal gains.
Small caps didn’t show much movement in early trade. US focused junior Empyrean Energy (AIM: EME) climbed 5%, while Kazakhstan operating junior Max Petroleum (LSE: MXP) added 4%. North American based explorer Nighthawk Energy (AIM: HAWK) rose almost 3%.
Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) headed in a different direction, shedding 4%.
Gold and and Silver tumble
While oil rose, metal prices were on decline with Gold slipping below US$1,050/oz and Silver moving down to US$17.36/oz. Platinum was at US$1,340/oz.
Most major mining stocks turned negative, responding to the declines in precious metal prices.
Gold producer Randgold Resources (LSE: RRS) and silver miner Fresnillo (LSE: FRES) both added 1.3%. Platinum producer Lonmin (LSE: LMI) managed to stay above the water with a marginal gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) outperformed the sector with a 1.7% climb.
Yamana Gold (LSE: YAU) dropped 3.3%.
Midcap gold miner Petropavlovsk (LSE: POG) declined 1.3%, while silver producer Hochschild Mining (LSE: HOC) slid 1%. Aquarius Platinum (LSE: AQP) lost less than 1%.
Most junior companies also slipped into the red.
South American based explorer Mariana Resources (AIM: MARL) was among the leading fallers in the sector with a 7% decline. Turkey focused gold miner Ariana Resources (AIM: AAU) and Argentina focused gold explorer Patagonia Gold (AIM: PGD) followed with losses of 6% and 5% respectively.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) also dropped 5%. Commodity asset development company Mercator Gold (AIM: MCR) was down 3.5%.
Diamond miner with assets in Sierra Leone and Guinea West African Diamonds (AIM: WAD) slipped over 15%.
Africa operating gold and platinum miner Goldplat (AIM: GDP) was one of the few bright spots in the sector with a 4.5% climb.
Miners slide as Copper nad Nickel decline
Base metals focused stocks also were in selling mode in the morning as Copper fell to US$2.81/pound and Nickel declined to US$8.40/pound. Zinc held steady at US$0.91/pound.
Indian miner Vedanta Resources (LSE: VED) and Eurasian Natural Resources (LSE: ENRC) both lost 1.1%, while copper miners Antofagasta (LSE: ANTO) and Kazakhmys (LSE: KAZ) declined less than 1%, as did Rio Tinto (LSE: RIO).
The world’s largest miner BHP Billiton (LSE: BLT) and Anglo American (LSE: AAL) were the top performers with both companies posting marginal gains.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, shedding about 1%.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) was down 17% after releasing its full year results. Botswana operating nickel and copper miner Discovery Metals (AIM: DME) and Uranium and copper explorer Kalahari Minerals (AIM: KAH) both lost more than 3%.
Copper and nickel explorer Regency Mines (AIM: RGM) was in buying mode, rallying 13%. Australia focused coking coal producer Caledon Resources (AIM: CDN) rose 3.5%.
Banks, insurance, private equity
With the exception of Lloyds (LSE: LLOY), which climbed almost 3%, major banking stocks made little headway this morning.
Another bailed out bank Royal Bank of Scotland (LSE: RBS) and Standard Chartered (LSE: STAN) both gained less than 1%, while Barclays (LSE: BARC) and HSBC (LSE: HSBA) were sitting just below the opening level.
Insurers also were little moved. Friends Provident (LSE: FP) climbed 1.4%, while Old Mutual (LSE: OML) rose marginally.
Standard Life (LSE: SL) shed 1%, while Prudential (LSE: PRU), Legal & General (LSE: LGEN), Aviva (LSE: AV) and car insurer Admiral Group (LSE: ADM) lost less than 1%.
Private equity group 3i (LS:E III) was flat.
Large and Mid Cap News
Scottish and Southern Energy (LSE: SSE) announced it has entered into an agreement to acquire the assets of ESB Contracts Limited, for a total cash consideration of €6.4m, the acquisition is due to complete on 30 November 2009.
National Express Group PLC (LSE: NEX) confirmed that the CVC Capital Partners private equity group has decided not to make an offer for National Express. Instead the transport company will proceed with an equity based fundraising which media reports put in excess of £300m. Investors and bid speculators will have been disappointed as the National Express share price collapsed, falling over 30% to trade at £3.20 on the open.
Old Mutual plc (LSE: OML) announced that its UK subsidiary Skandia UK Holdings Limited has completed the sale of the Bankhall Group to the Friends Provident subsidiary The Sesame Group. The total gross assets disposed of are £11.8m.
BHP Billiton (LSE: BLT) has lobbed a cash takeover offer for Pilbara iron ore developer United Minerals Corporation (ASX: UMC) at $1.30 per share.
Randgold Resources Limited (LSE: RRS) announced it has completed its takeover of Moto Goldmines Ltd (TSX: MGL, AIM: MOE). Randgold and AngloGold Ashanti Ltd, through their indirectly jointly owned subsidiary 0858065 BC Ltd, now control Moto, having acquired all the outstanding Moto common shares.
The Carphone Warehouse Group PLC (LSE: CPW) said its joint venture with Richard Branson’s Virgin Group, Virgin Mobile France, is to acquire French mobile operator Tele2 Mobile for €56m.
Small Cap News
London Mining (OSX: LOND, XETRA: L9K) said that, further to its statement on October 12 that it appointed a nominated advisor and joint brokers ahead the planned listing on the Alternative Investment Market, the listing is expected to take place in November 2009.
China and Mongolia focused miner Lotus Resources (OFEX: LOTP) has successfully conducted a placing to raise £100,000 to develop identified fluorspar opportunities in Mongolia.
African focused nickel and gold exploration and development junior Nyota Minerals (ASX, AIM: NYO) has appointed Martyn John Churchouse as execurive director. He previously served as chief executive of African focused mining investment company Carlton Resources PLC (AIM: CLN) and still remains an executive director there.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) released its full year results today, reporting lower expenses and losses, while achieving exploration goals for the year and making progress in finding partners for its lead and zinc projects.