Overview: the FTSE 100 was 0.5% down in late afternoon amid a slow start on Wall Street, where the main indices turned negative as the markets were absorbing a series of economic updates that were released today.
The data was mixed as while the New York Fed’s business conditions unexpectedly fell to 2.55 in December from 23.51 in the previous month, signalling a decline in manufacturing activity in the state, and wholesale prices rose 1.8% in November due to increase sin energy prices, industrial production climbed 0.8% in November to bolster the falling stock markets.
The Dow Jones Industrial Average and the broader S&P 500 index slid 0.3%, while the technology heavy Nasdaq composite managed to stay at the opening level in early trade.
The UK inflation update released in the morning revealed a higher than expected rise of 1.9% in November, while an inflation rate of 1.8% was projected.
Royal Bank of Scotland (LSE: RBS) emerged atop the leaderboard today with a gain of nearly 3%, while fellow bailed out bank Lloyds (LSE: LLOY) also did well, tacking on 1%. Defensive stocks did well as utilities Severn Trent (LSE: SVT) and United Utilities (LSE: UU) climbed 2%. Tour companies also were in demand with cruise operator Carnival Corporation (LSE: CCL) and tour operator Thomas Cook (LSE: TCG) rising 2% and 1% respectively. Other notable risers included food service business Compass Group (LSE: CPG), consumer goods company Reckitt Benckiser (LSE: RB) and pharmaceutical company Shire (LSE: SHP), all of which gained more than 1%.
Banks HSBC (LSE: HSBA) and Barclays (LSE: BARC), engineering firm Amec (LSE: AMEC), hedge fund manager Man Group (LSE: EMG) and airline British Airways (LSE: BAY) emerged as the biggest fallers among the blue chips today, shedding more than 2%.
Commodities
Oil prices slightly improved during the day with January Brent Crude rising to US$72.34/barrel, while US light, sweet crude climbed to US$70.43/barrel.
With the sole exception of BG Group (LSE: BG), which posted a small gain, all major oil and gas stocks were in decline today. Petrofac (LSE: PFC) declined marginally, while BP (LSE: BP) was down almost 1% and fellow supermajor Shell (LSE: RDSB) slid 1.3%. Tullow Oil (LSE: TLW) and Cairn Energy (LSE: CNE) were at the bottom of the pile with losses of 2%.
Midcaps also were in selling mode, except for Dragon Oil (LSE: DGO), which remained flat. Fellow FTSE 250 constituents Dana Petroleum (LSE: DNX) and Heritage Oil (LSE: HOIL) dropped 1% and 2%, respectively.
Kazakhstan operating Max Petroleum (LSE: MXP) went against the tide with a 4% gain, while US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) and Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) also did well, climbing 3%.
North America focused oil & gas junior Pantheon Resources (AIM: PANR) was one of the biggest fallers in the sector, dipping 21% after conducting a placement. Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) followed with a 13% slide. Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) and Ukraine focused gas producer, Regal Petroleum (AIM: RPT) lost 7% and 6% respectively.
Gold, silver and platinum rebound, but miners stay in red
Precious metals recouped some of their early losses with gold climbing back to US$1,121/oz, while silver and platinum reached US$17.27/oz and US$1,437/oz, respectively.
Major mining stocks were in decline today and most FTSE 350 companies finished the day in red despite the recovery in metal prices.
Gold miner Randgold Resources (LSE: RRS) and platinum producer Lonmin (LSE: LMI) declined marginally, while fellow FTSE 100 constituent silver miner Fresnillo (LSE: FRES) shed nearly 3%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) also lost less than 1%.
Midcaps were mixed as while gold miner Petropavlovsk (LSE: POG) and silver producer Hochschild Mining (LSE: HOC) posted small losses, Aquarius Platinum (LSE: AQP) went again the tide, advancing 1.2%.
Juniors mostly declined. Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) was among the biggest fallers in the sector with a 16% slide. Western Australia operating Norseman Gold (AIM: NGL), Kyrgyzstan focused gold explorer and developer Chaarat Gold Holdings (AIM: CGH) and commodity asset development company Mercator Gold (AIM: MCR) moved along, slipping 6.5%, 6% and 5.5%, respectively.
Philippines focused gold producer Medusa Mining (AIM&ASX: MML) and South American based explorer Mariana Resources (AIM: MARL) were down 4.5% and 4%.
Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) and UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) went against the tide with gains of 4.5% and 3.5% respectively.
Copper and nickel retreat
Base metals were in decline today with copper and nickel moving down to US$3.09/lb and US$7.51/lb, while zinc returned to US$1.03/lb.
All major base metal focused miners slid today. Antofagasta (LSE: ANTO) was at the bottom of the pile with a 2% decline. Xstrata (LSE: XTA) followed with a loss of nearly 2%, while Eurasian Natural Resources (LSE: ENRC), Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) all were down 1.1%.
Anglo American (LSE: AAL) and BHP Billiton (LSE: BLT) were flat, while Vedanta Resources (LSE: VED) declined marginally.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the sector, shedding 1.6%.
Russia focused copper and nickel miner Amur Minerals (AIM: AMC) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) were among the top performers in the sector, climbing 8% and 6.7% respectively.
Indonesia operating coal miner Churchill Mining (AIM: CHL), specialty minerals exploration and development company Thor Mining (AIM: THR), Uranium and copper explorer Kalahari Minerals (AIM: KAH) and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) were in retreat, pulling back 7%, 6%, 5% and 4%, respectively.
Banks, insurance, private equity
The banking sector was in decline today with the exception of bailed out banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS), which advanced 3% and 1.3% respectively. Barclays (LSE: BARC) and HSBC (LSE: HSBA) shed 2% and Standard Chartered (LSE: STAN) declined marginally.
Most insurers also were in selling mode today with Admiral Group (LSE: ADM), Aviva (LSE: AV), Old Mutual (LSE: OML), Prudential (LSE: PRU) and RSA Insurance Group (LSE: RSA) shedding less than 1%. Standard Life (LSE: SL) and Legal & General (LSE: LGEN) went against the tide, sliding 1% and 3%, respectively.
Private equity group 3i (LSE: III) declined marginally.
Small Cap Movers
Other notable movers among the small caps included Africa focussed soft commodity specialist, Agriterra Limited (AIM: AGTA) with a 6.3% gain, drug discovery and development group Immupharma (AIM: IMM) and Uruguay Mineral Exploration (AIM: UGY) with losses of 4% and 5%.
Large and Mid Cap News
Kraft Foods (NYSE: KFT) responded to comments from Cadbury’s (LSE: CRBY) board yesterday, stating that it will maintain a disciplined approach to the possible takeover while questioning the British confectioner’s ability to attain its strategic targets. According to Kraft, the long-term targets are subject to significant risk and uncertainty whilst its offer for Cadbury provides "value certainty and upside potential".
The Rank Group Plc (LSE: RNK) is set to receive a £25.9 million rebate from Her Majesty's Revenue & Customs (HMRC), after the VAT and Duties Tribunal ruled in favour of the gaming group’s overpayment claim. The FTSE250 constituent expects to receive payment during the first quarter of 2010.
Costa Coffee parent company, Whitbread Plc (LSE: WTB) reached an agreement with Eastern European ‘coffee bar’ operator Coffeeheaven international (AIM: COH), whereby the FTSE100 constituent will acquire the group for 24p per share. The company will be integrated into the Costa Coffee business, providing the growing subsidiary with an established Central and Eastern European platform.
UK Transport operators National Express Group Plc (LSE: NEX) revealed a 90.47% take-up of its fully-underwritten £360 million rights issue. After a failed private equity buy-out earlier this year the FTSE250 constituent decided to issue 357 million shares to reduce its debt obligations and satisfy banking covenants beyond 2009.The company’s new ‘fully paid’ shares began trading on the London Stock Exchange this morning.
Newly re-classified support service company, the VT Group (LSE: VTG) have requested a meeting with the board of Mouchel Parkman (LSE: MCHL) to work towards a recommended offer for its acquisition. The cash-rich former shipbuilder also revealed the second rejected offer represented more than a 55% premium to Mouchel’s share price, at that time. VT Group said it wants to understand the basis of Mouchel’s rejection.
Dragon Oil PLC (LSE: DGO) today updated the market on progress on its flagship project area in Turmenistan, the first time in weeks that the now failed minority buy-out attempt by 51.5 percent shareholder Emirates National Oil Co Ltd LLC (ENOC) was not stealing the limelight.
Small Cap News
Telit Communications (AIM: TLT) has signed a MoU (memorandum of understanding) with Fiat Group’s subsidiary Magneti Marelli in the area of GSM and GPRS modules to be used in telematic devices in the automotive field.
African Diamonds PLC (AIM: AFD) expects to take a significant leap forward in 2010 when development commences on the AK6 diamond deposit in Botswana. It is forecasting that the deposit comes on stream in 2011 with an initial production from an open pit of 400,000 carats a year. It believes it will build a mine capable of producing one million carats a year for US$88 million.
Human Resource specialists, OneClickHR Plc (AIM: OCR) have agreed a 10.5p per share offer for the company, from major international outsourcer Automatic Data Processing (NASDAQ: ADP). The Proposal is supported by aggregate shareholders of approximately 99.3 million shares, representing nearly 67% of the group’s share capital.
Solo Oil PLC (AIM: SOLO) said the conditions for completion of its farm-in with Aminex PLC (LSE: AEX) for a 12.5 percent interest in the Likonde-1 well on Aminex's Ruvuma Basin PSA in southern Tanzania have now been met and the farm-in is therefore formally confirmed.
Texas and Louisiana operating Pantheon Resources (AIM: PANR) has undertaken a placing to raise £7.3 million to repay loans and cover the costs associated with the Austin Chalk project in Tyler County in Texas.
Broker Libertas Partners was encouraged by yesterday’s operational update from Kazakhstan operating gold miner Frontier Mining AIM: FML), reversing its forecasts for the company, now projecting a breakeven in 2010 instead of the previously projected loss of US$5 million and foreseeing “noticeable profits” in 2011.
Gulf Keystone Petroleum Ltd (AIM: GKP) said the Bijeel-1 well in the Akri Bijeel block in Iraq’s Kurdistan region was spudded on Friday, December 11. Gulf Keystone holds a 20 percent working interest in the production sharing contract. The block is operated by Kalegran Ltd, a subsidiary of Hungarian Oil and gas group MOL holding 80 percent of the PSC.
Smallcap software specialist, KBC Advanced Technologies (AIM: KBC)(“KBC”) announced this afternoon that it had been awarded a new software contract with Brazilian oil and gas giant, Petrobras (NYSE: PBR).
Churchill Mining PLC (CHL: AIM) announced the completion of the feasibility study for its flagship project, the 75 percent held East Kutai coal project (EKCP) in Indonesia, confirming a preferred 20 million tonne per annum production rate. The company anticipates project construction work at EKCP to start in 2010 and take two years to complete.
Preliminary full-year results from drug development companies are often a drab affair - with no commercial products, there is often little for investors to sink their teeth into. However, results this morning from Renovo Plc (AIM: RNVO), a biopharmaceutical company focused on developing drugs that improve tissue repair and the appearance of scars, made interesting reading.
Africa operating gold and platinum miner Goldplat (AIM: GDP) updated the market on its operations today, reporting that instillation of intensitve cyanidation plants in Ghana and South Africa was set to commence to help cut transport and processing costs, while the company’s wholly own Kilimapesa Gold was one step away from securing the mining lease for the Kilimapesa gold project in Kenya.
US focused junior Empyrean Energy (AIM: EME) has signed a new participation agreement with US-based Krescent Energy Company for 10% of the Aquarius prospect, onshore Texas, which is similar in technical natural and commercial terms to the recently announced deal between the two companies over the Hercules prospect.
Gene therapy developers, Oxford BioMedica (LSE: OXB) announced its StarGen therapy has received orphan treatment designation from the European Medicines Agency (EMEA). As a result the treatment will have ten years of marketing exclusivity and reduced regulatory fees. StarGen’s clinical development is expected to start in 2010, in collaboration with Sanofi-Aventis (NYSE: SNY).
When Jeff Malaihollo set up Central China Goldfields (AIM: GGG) and listed it on the Alternative Investment Market (‘AIM’), the plan was simple. Leverage the company’s connections and experience to secure several early stage, but promising projects in China.
Building services business, Managed Support Services plc (AIM: MSS) has acquired the assets and contracts of Johnson Service Group’s subsidiary, Workplace Engineering, for a total consideration of £300,000. MSS will pay an initial consideration of £200,000, with a further additional £100,000 payable subject to certain contractual negotiations with existing clients. Shares in the specialist service group climbed 3% this morning.
Uruguay Minerals Exploration (UME; AIM: UGY, TSX-V: UME) reported high grade results from the ongoing Arenal Deeps resource definition drilling programme, confirming the projections outlined in the initial resource model, and paving the way for the company to push ahead with its development ambitions.