Overview: as was expected, the FTSE 100 was weak in early trade with a 1% fall, dragged down by considerable losses in the financial, mining and energy sectors.
Royal Bank of Scotland (LSE: RBS) tumbled 10% after the government increased it stake in the troubled bank to 84% to emerge as the leading faller in the market. Other financial stocks, including the insurance sector, fell in sympathy, while miners and energy stocks were falling in response to declined in oil and metal prices to push the Footsie further down.
Not a single FTSE 100 constituent rose 1% or more today with business services company Serco Group (LSE: SRP), business management software supplier Sage Group (LSE: SGE), satellite communications firm Inmarsat (LSE: ISAT) and publisher Reed Elsevier (LSE: REL) being the only risers in the FTSE 100 with marginal gains.
As a result, the blue chip index struggled to hold on to the 5,000 mark at midday.
Stock index futures in the US pointed to another weak start on Wall Street with the Dow Jones industrial average projected to slide more than 0.5% in early trade.
Commodities
Oil prices inched lower, causing most energy stocks to go south.
December Brent Crude was down to US$75.74/barrel, while US light, sweet crude for December delivery slid to US$77.15/barrel.
Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) were the leading fallers in the sector in the FTSE 100, shedding 3.7% and 3.2% respectively.
BP (LSE: BP) followed with a 1.5% slide, while fellow supermajor Shell (LSE: RDSA) declined marginally.
Cairn Energy (LSE: CNE) and BG Group (LSE: BG) lost about 1%.
Midcap Heritage Oil (LSE: HOIL) fell the hardest, dropping 5.1%. Fellow FTSE 250 constituent Dragon Oil (LSE: DGO) was flat, while Dana Petroleum (LSE: DNX) lost 2%.
Ukraine focused gas producer, Regal Petroleum (AIM: RPT) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) were the leading fallers among the juniors, slipping 6.7%.
Europe focused oil and gas developer Ascent Resources (AIM: AST) followed with a 5.5% decline, while EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) dropped 3.3%.
US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) did better, tacking on 4% and 3% respectively.
Gold and Silver buoy miners
Precious metals inched slightly lower in the morning and Gold sliding to US$1,058/oz, while Silver and Platinum declined to US$16.35/oz and US$1,325/oz respectively.
Major mining stocks declined, giving back most of yesterday’s gains.
Platinum producer Lonmin (LSE: LMI) was at the bottom of the pile with a 5.3% slide, while silver miner Fresnillo (LSE: FRES) followed with a loss of nearly 5%.
Gold miner Randgold Resources (LSE: RRS) declined 2.9%, while specialty chemicals firm Johnson Matthey (LSE: JMAT) lost 2.3%.
Midcaps also switched to selling mode as gold miner Petropavlovsk (LSE: POG) lost 3.3%, while Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) shed over 5%.
Turkey focused gold miner Ariana Resources (AIM: AAU) and copper and gold miner EMED Mining (AIM: EMED), which benefitted from a positive research notes that were released today, were the top performers among the juniors with gains of 7.4% and 6.4% respectively.
South American based explorer Mariana Resources (AIM: MARL) fell heavily for a second day in a row, slipping 14% to wipe out most of last week’s gains. Australian gold and copper prospector Solomon Gold (AIM: SOLG) also fell, shedding almost 7%.
Other fallers included Uzbekistan focused gold miner Oxus Gold (AIM: OXS), which slid 5% as well as Argentina focused gold explorer Patagonia Gold (AIM: PGD), African focused nickel and gold exploration and development junior Nyota Minerals (ASX&AIM: NYO) and Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML), all of which lost more than 3.5%.
Copper and Nickel decline
Base metals focused stocks also were in decline and Copper and Nickel gave way, moving down to US$2.90/lb and US$8.06/lb respectively. Zinc slid to US$0.97/lb.
Eurasian Natural Resources (LSE: ENRC) and Xstrata (LSE: XTA) were the leading fallers with losses of 5.4%. Kazakhmys (LSE: KAZ) and Vedanta Resources (LSE: VED) followed with declines of over 4%.
Anglo American (LSE: AAL) and Rio Tinto (LSE: RIO) lost more than 3%, while BHP Billiton (LSE: BLT) dropped nearly 4%.
Antofagasta (LSE: ANTO) was down 2.8%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, shedding 4.2%.
Small cap base metal miners did not show much movement in the morning. Botswana operating nickel and copper miner Discovery Metals (AIM: DME) was the leading faller with a loss of almost 5%. Zinc mining and recycling specialist ZincOX (AIM: ZOX) and South American focused junior miner Herencia Resources (AIM: HER) declined over 4%, while uranium and copper explorer Kalahari Minerals (AIM: KAH) pulled back 3.7%.
Banks insurance, private equity
Bailed out bank Royal Bank of Scotland (LSE: RBS) continued its freefall, plunging 8% after agreeing along with fellow partly nationalised bank Lloyds (LSE: LLOY) to sell some of its assets to boost competition in the banking sector. RBS will get a further £40 billion and will now be 84% owned by the taxpayer.
Lloyds, which also confirmed a £21 billion cash call today, lost just 1.8%.
HSBC (LSE: HSBA) and Barclays (LSE: BARC) also were in selling mode, falling 3.8% and 3.3% respectively.
Standard Chartered (LSE: STAN) was down almost 5%.
Insurers also were deep in the red. Aviva (LSE: AV) and Old Mutual (LSE: OML) were at the bottom of the pile, shedding almost 5%, while Standard Life (LSE: SL) lost 4%. RSA Insurance Group (LSE: RSA) was down 3%, while car insurer Admiral Group (LSE: ADM) and Legal & General (LSE: LGEN) both lost 2%.
Private equity group 3i (LSE: III) declined marginally.
Small Cap Movers
Other notable movers among the small caps included agricultural sector focused investor Agriterra Limited (AIM: AGTA), which tumbled 8% and medical and technology sector focused investor Amphion Innovations (AIM: AMP) with a 8% climb.
Large and Mid Cap News
FTSE 100 turbine developer and manufacturer Rolls-Royce Group (LSE: RR.) said this morning in its interim management statement that trading continues to be “in line” with expectations.
Small Cap News
Shares in Neuropharm Group (AIM: NPH) surged 45% higher this morning after the specialty pharmaceutical announced that it was in discussions which may lead to an offer for the company. Neuropharm is focused on neurodevelopmental disorders, including Fragile X Syndrome and Obsessive Compulsive Disorder and Autism.
Kyrgyzstan operating gold miner Chaarat Gold Holdings (AIM: CHG) reported high grade sampling results from a surface drilling programme at one of the target areas of its flagship Chaarat project in Kyrgysztan, which the company said could have a significant impact on the economics of the project.
Dominion Petroleum Ltd (AIM: DPL) said it has appointed Andrew Cochran as chief executive officer with immediate effect.
Business communications specialist, SpiriTel (AIM: STP) announced its seventh acquisition in three years this morning, in the shape of Edge Solutions, a provider of data and voice services to around 200 corporate customers.
Food technology specialist Provexis (AIM: PXS) said the authorisation process by the European Commission for the use of a health claim for its Fruitflow anti-thrombotic technology was now in an advanced stage, expecting to make an announcement as soon as the process concludes.
US focused hydrocarbon production and development company Nighthawk Energy PLC (AIM: HAWK) said the Xenia gas pipeline at its Revere oil and gas project is now fully operational and flowing in excess of 650,000 cubic feet of gas per day from eight wells.
Broker Hanson Westhouse maintained its ‘buy’ recommendation and target price of 14 pence for Horizonte Minerals (AIM: HZM) after the Brazil focused gold miner completed an agreement with AngloGold Ashanti for a US$5.3 million exploration alliance, which the broker said provided it with an endorsement from one of the world’s major gold producers that it did have the expertise and experience to make new discoveries.
Biodegradable plastics manufacturer Plantic Technologies Limited (AIM: PLNT) is looking to expand its market reach with a new collaboration deal with German packaging supplier Kesko GmbH, which has a considerable presence in high-end packaging markets.
Equity research company Equity Development said copper and gold development group EMED Mining (AIM: EMED) was back in play thanks to the recovery in base and precious metal prices, valuing EMED’s stock at three times its current share price.
One of Britain’s largest coal producers, ATH Resources (LSE: ATH), announced today the completion of the group’s debt refinancing.