Overview: the FTSE 100 opened with a 0.5% loss this morning as miners were dragged down by lower metal prices, while stock index futures in the US pointed to a lower start on Wall Street to further weaken the blue chip index.
Oil and metal prices slid this morning to send the mining and energy sectors down, while financials also switched to selling mode. Base metals focused miner Eurasian Natural Resources (LSE: ENRC) declined 3.3% to emerge as the biggest faller among the blue chips, while part-nationalised banks Royal Bank of Scotland (LSE: RBS) and Lloyds (LSE: LLOY) joined in with losses of 2.2% and 2.8% respectively. Another bank Barclays (LSE: BARC) and precious metal miners Randgold Resources (LSE: RRS) and Fresnillo (LSE: FRES) pulled back 2%. Other notable fallers included London Stock Exchange Group (LSE: LSE) and retailer Kingfisher (LSE: KGF), which both shed nearly 2%.
Not much was happening on the leaderboard as only as handful of FTSE 100 constituents managed to rake in gains of more than 1%. Tour operator TUI Travel (LSE: TT) and software developer Sage Group (LSE: SGE) took the lead, advancing 2%. Another tour company Thomas Cook (LSE: TCG), distribution and outsourcing business Bunzl (LSE: BNZL), investor Resolution (LSE: RSL) and beverage group Diageo (LSE: DGO) gained more than 1%.
Futures for the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq composite inched lower this morning following the fall in the commodities in anticipation of an increase in interest rates by the Federal Reserve, whose Chairman Ben Bernanke scheduled to speak at the Ecnomic Club of Washington at noon today.
Commodities
Oil prices slid this morning with January Brent Crude moving down to US$77.27/barrel, while US light, sweet crude for January delivery declined to US$74.98/barrel.
Oil and gas stocks mostly declined this morning. Cairn Energy (LSE: CNE) lost 1.2%, while BG Group (LSE: BG) followed with a loss of nearly 1%. Petrofac (LSE: PFC) and Tullow Oil (LSE: TLW) declined marginally, as did BP (LSE: BP), while fellow supermajor Shell (LSE: RDSB) went against the tide, posting a small gain.
Midcaps also were in decline. Dragon Oil (LSE: DGO) was down 1.2%, while Dana Petroleum (LSE: DNX) lost almost 1% and Heritage Oil (LSE: HOIL) posted a marginal loss.
Irish oil and gas exploration company Petroceltic International (AIM: PCI) was the top performer among the juniors, advancing 10.5% after reporting test results from the AT-2 well at its Ain Tsila gas project in Algeria.
Europe focused oil and gas developer Ascent Resources (AIM: AST) headed in the opposite direction, sliding 9.3%, while Kazakhstan operating Max Petroleum (LSE: MXP) and Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP) followed with losses of over 4%.
Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) was down 3.5%.
Miners slide as gold and silver tumble
Precious metals retreated. Gold continued its freefall, moving down to US$1,132/oz as the US dollar continued strengthening. Silver and platinum followed, falling to US$18.13/oz and US$1,425/oz respectively.
Gold miner Randgold Resources (LSE: RRS) was the biggest faller among the FTSE 100 mining stocks, shedding 2.7%. Platinum producer Lonmin (LSE: LMI) and silver miner Fresnillo (LSE: FRES) followed with losses of 2.2% and 2.5% respectively.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) lost less than 1%.
In the FTSE 250, Aquarius Platinum (LSE: AQP) sank to the bottom with a 5% decline. Silver producer Hochschild Mining and gold miner Petropavlovsk (LSE: POG) slid 1.8% and 2.8% respectively.
Copper and gold miner EMED Mining (AIM: EMED) led the small caps with an 11% surge. Uzbekistan focused gold miner Oxus Gold (AIM: OXS) also did well, rising 4%.
Notable fallers included Philippines focused Metals Exploration (AIM: MML) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML), which slid 7% and 6% respectively. Africa focused gold deposit developer Cluff Gold (AIM: CLF), Brazil focused gold miner Horizonte Minerals (AIM: HZM) and Western Australia operating Norseman Gold (AIM: NGL) pulled back 4%, as did Australian gold and copper prospector Solomon Gold (AIM: SOLG).
Copper and nickel fall
Base metals were in decline this morning as copper and nickel moved down to US$3.14/lb and US$7.18/lb respectively as zinc slid to US$1.04/lb.
All major base metals focused miners were in selling mode following the declines in metal prices. Eurasian Natural Resources (LSE: ENRC) was at the bottom of the pile with a 3.4% loss, while Xstrata (LSE: XTA) followed with a 2% decline. Anglo American (LSE: AAL) was up 1.6%, Kazakhmys (LSE: KAZ) and Vedanta Resources (LSE: VED) gains 1.2% and Antofagasta (LSE: ANTO), BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) declined marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, sliding 3.2%.
Tunisia focused metal miner Maghreb Minerals (AIM: MMS) led the juniors with a 6.7% climb, while Laterite nickel specialist European Nickel (AIM: ENK) and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) were in decline, pulling back 5% and 4% respectively.
Banks, insurance, private equity
Financial stocks were weak this morning. Royal Bank of Scotland (LSE: RBS) was the biggest faller in the banking sector, sliding 2.7% as fellow bailed out bank Lloyds (LSE: LLOY) lost 2%, as did Barclays (LSE: BARC). HSBC (LSE: HSBA) was down 1.5% and Standard Chartered (LSE: STAN) declined marginally.
Insurers Legal & General (LSE: LGEN), Old Mutual (LSE: OML), Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) all posted small losses in the morning, while Admiral Group (LSE: ADM) and Aviva (LSE: AV) went against the tide, rising marginally.
Private equity group 3i (LSE: III) rose marginally.
Small Cap Movers
Other notable movers among the small caps included emerging speciality pharmaceutical company Alliance Pharma (AIM: APH), which slipped 4.5%, Gemfields (AIM: GEM) with a 14% loss and drug discovery and development group Immupharma (AIM: IMM), which moved down 5%.
Machine to machine (M2M) communications specialist Telit Communications (AIM: TCM) did better, adding 5%.
Large and Mid Cap News
International mining giants, BHP Billiton (LSE: BLT, ASX: BHP) and Rio Tinto (LSE: RIO, ASX: RIO) signed binding agreements in relation to the proposed Iron Ore Production Joint Venture, in the Pilbara mining district, Western Australia. This 50:50 collaboration follows years of on-off negotiations, with many previous JV’s and potential mergers falling by the way-side. BHP and Rio believe the JV’s unique production and development synergies will be in excess of US$10 billion.
Europe’s largest independent waste manager, Shanks Group plc (LSE: SKS) received an unsolicited takeover bid of 135p per share, from a private equity group. After careful consideration of the ‘highly preliminary’ offer, Shanks said a cash offer in excess of 150p per share would deliver an ‘appropriate value’ to shareholders.
UK Support services company, VT Group (LSE: VTG) closed the initial phase of the Governments ‘Building Schools for the Future’ programme for the London Borough of Greenwich Council. The FSTE250 constituent is the project’s Strategic Partner Organisation.
Engine and power system manufacturer, Rolls-Royce (LSE: RR.) announced a new contract win, to supply 24 lightweight waterjets for the UAE Navy's fleet of fast patrol boats. The new order adds to the 150 Rolls-Royce waterjets already in service across the region. The FTSE100 constituent said it is working with Abu Dhabi Ship Building (ADSB) to establish a waterjet service centre in order ‘to provide in-service support for our growing customer base’.
British construction and support service group, Carillion (LSE: CLLN) sold equity in two of its Public Private Partnership (PPP) projects for a combined £86.9 million. The FTSE250 constituent now expects to move into a positive net cash position by year end.
Small Cap News
Jubilee Platinum’s (AIM: JLP/JSE: JBL) decision to acquire Braemore Resources appears to be reaping dividends. The key asset in the Braemore portfolio was the ConRoast Smelter technology in South Africa, which unlike more conventional smelting, can process lower grade ore, or ore with high chrome content.
Atlantic Coal (AIM: ATC) has entered into a non-binding memorandum to acquire Montana-based clean burning coal development company Maple Carpenter Creek (MCC) for 1.33 billion shares representing 49% of the enlarged group’s capital.
Fusion IP PLC (AIM: FIP), the university commercialisation company which turns university research into business, has invested £300,000 into Diurnal, an early stage Fusion portfolio company from the University of Sheffield which is developing a novel approach to drug delivery which will help patients suffering from reduced cortisol and testosterone levels.
Biocompatibles International (AIM: BII) and AstraZeneca (LSE: AZN) have announced that they will initiate clinical trials for their jointly developed type II anti-diabetes drug CM3 in January after the pre-clinical phase of the programme was completed ahead of schedule.
Shares in Plant Impact (AIM: PIM) came in demand this morning after the developer of technologies that improve crop productivity released its interim results, reporting a nearly fourfold increase in revenues while losses narrowed.
Shares in Renewable Energy Generation Limited (AIM: RWE), the wind power and biomass focused energy group, held steady this morning despite confirmation of a five year contract to supply electricity and heat to the Port of Dover from its biofuel fired combined heat and power system.
Gemfields (AIM: GEM) said it intended to concentrate on further slashing operating costs and positioning the business for growth for when the conditions in the gemstone market improve, while reporting first revenues from emerald sales in the previous financial year along with successful post-period auctions as production increased.
Marketing software specialist smartFOCUS Group PLC (AIM: STF) said it has been selected by Bournemouth-based friendly society Liverpool Victoria (LV=) to streamline and simplify the financial services group’s entire marketing strategy.
Independent News & Media PLC (LSE: INM) said it has sold its 49 percent interest in Verivox Holdings Ltd, a German online price comparator for energy and telecom services, for €16 million net to VVX Investments Ltd, an Oakley Capital Private Equity LP unit. An additional €1 million will be payable in 2010 if Verivox reaches EBITDA targets in the current year.
Regency Mines PLC (AIM: RGM) said it is confident it has come out of the market downturn far stronger than it went in and is focusing on progressing the early listing of the DNi joint venture with Direct Nickel Pty Ltd in connection with the Botue-Mambare laterite nickel-cobalt project in Papua New Guinea.
Irish oil and gas exploration company Petroceltic International (AIM: PCI) reported flow rates of 4.9 mmscf/d (million standard cubic feet per day) following fracture stimulation at the AT-2 well, which was in line with expectations and signaled an extension of the Ain Tsila gas discovery.