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FTSE 100 rises after German business confidence edges up

Published: 09:57 24 Sep 2010 EDT

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Overview: the FTSE 100 advanced 0.8% today after the Ifo institute said its German business confidence index unexpectedly rose from 106.7 to 106.8 in September.

In other news, US durable goods orders declined 1.3% to US$191.2 billion in August, which, however, had little impact on equities.

Chipmaker ARM Holdings (LON:ARM) led the blue chips with a 4.5% advance. Commercial property company Hammerson (LON:HMSO) and fashion house Burberry (LON:BRBY) added 3.5% and 3% respectively. Engineering company Invensys (LON:ISYS) and telecom company BT Group (LON:BT.A) added just over 2%. Defence and aerospace systems manufacturer BAE Systems (LON:BA) climbed 2%

Temporary power provider Aggreko (LON:AGK) was at the bottom of the pile with a 2% loss. Engineering company Weir Group (LON:WEIR) declined 1.5% and United Utilities (LON:UU) lost just over 1%.

US stocks rallied in early trade. The Dow Jones Industrial Average advanced 1.4%, while the S&P 500 index and the technology heavy NASDAQ composite surged 1.5%.

Commodities

Oil prices track gains in equities

Oil prices declined yesterday after the US Labor Department said that initial jobless claims rose to 465,000 last week, while EU manufacturing expansion was shown to have slowed.

The 7.6% rise in US home sales in August reported later in the day provided little relief for the markets with the main indexes in the US closing in the red.

Today, however, the FTSE 100 and the Dow Jones index were on the rise, leading crude oil futures higher.

Oil prices usually follow movements in share prices, which serve as an indicator of the strength of the economy, impacting the outlook for energy demand.

This week’s inventories reports were a drag on the prices.

On Tuesday, The American Petroleum Institute (API) reported a surprising gain of 2.2 million barrels in US stockpiles.

This was followed by a report from the US Energy Department, which said that crude oil supplies increased by 1 million barrels last week, suggesting a lower level of demand in the world’s largest energy consumer.

November Brent Crude rose to US$78.40/barrel, while US light, sweet crude for November delivery improved to US$75.52/barrel.

Supermajors BP (LON:BP) and Shell (LON:RDSB) declined marginally, while BG Group (LON:BG) and Cairn Energy (LON:CNE) added 1% and 1.3% respectively and Tullow Oil (LON:TLW) tacked on almost 2%.

Oil and gas engineering firm Amec (LON:AMEC) posted a small gain, while peer Petrofac (LON:PFC) slid just below the opening level.

Midcaps were mixed. Dana Petroleum (LON:DNX) stood just above the opening level, while Salamander Energy (LON:SMDR) advanced 1.4% and Melrose Reosurces (LON:MRS) was in the lead with a 2.3% gain.

Heritage Oil (LON:HOIL) and Soco International (LON:SIA) moved in the opposite direction, sliding 1.6% and 2.7%. JKX Oil & Gas (LON:JKX) declined 1%.

Dragon Oil (LON:DGO) and Premier Oil (LON:PMO) declined marginally.

North Sea explorers Xcite Energy (LON:XEL) was among the top performing small caps with a gain of over 8%. Central and Eastern European oil and gas company Aurelian Oil & Gas (LON:AUL) and European focused oil and gas exploration and production company Ascent Resources (LON:AST) also did well, rising 8% and 6.5% respectively.

Gold reaches $1,300

Spot gold prices posted yet another record high at US$1,299/oz today, while futures for the yellow metal breached the US$1,300/oz level after getting help from a weak US dollar.

Gold stood at US$1,298/oz. Silver and platinum rose to US$21.38/oz and US$1,639/oz respectively.

Major mining stocks did not show much movement today. Gold producers Randgold Resources (LON:RRS) and African Barrick Gold (LON:ABG) declined marginally, while platinum miner Lonmin (LON:LMI) was flat and silver miner Fresnillo (LON:FRES) added less than 1%.

Specialty chemicals firm Johnson Matthey (LON:JMAT) posted a small gain.

Gold miner Petropavlovsk (LON:POG), silver producer Hochschild Mining (LON:HOC) and Aquarius Platinum (LON:AQP) posted small losses.

Diversified mining investment company Mercator Gold (LON:MCR) was among the leaders in the sector, jumping 25%. Colored gemstone company focused on Zambian emeralds, Gemfields Resources (LON:GEM), also performed strongly, rising 10.5%.

Turkey focused gold explorer and developer Ariana Resources (LON:AAU) and the only publicly listed gold mining company with primary operations inside the Republic of Uzbekistan, Oxus Gold (LON:OXS) rose 9% and 8.5% respectively. Ethiopia operating mineral exploration and development company Nyota Minerals (LON:NYO) joined the party, climbing 6%.

Base metals rise ot lift miners

Copper and nickel climbed to US$3.56/lb and US$10.31/lb, while zinc reached US$1/lb.

Base metal miners were mixed. Xstrata (LON:XTA) led the sector with a 2.5% advance. Rio Tinto (LON:RIO) and BHP Billiton (LON:BLT) followed with gains of 2% and 1% respectively. Vedanta Resources (LON:VED) rose marginally.

Antofagasta (LON:ANTO) moved in the opposite way, sliding 1.1%. Anglo American (LON:AAL), Eurasian Natural Resources (LON:ENRC) and Kazakhmys (LON:KAZ) declined marginally.

Swiss-headquartered resources company with assets in Ukraine Ferrexpo (LON:FXPO) declined 1.8%.

Africa operating zinc, lead, barite and fluorite explorer Maghreb Minerals (LON:MMS) led the juniors with a 23.5% surge. Gold and uranium focused Red Rock Resources (LON:RRR) followed, rallying 18%. Nickel and copper explorer Regency Mines (LON:RGM) advanced 13.5%.

Developer of the Wetar copper project in Indonesia, Finders Resources (LON:FND), and Mozambique operating tantalum miner Noventa (LON:NVTA) also did well, climbing 9%. Russia focused copper and nickel miner Amur Minerals (LON:AMC) followed with an 8% rise.

Banks, insurance, private equity

Most financial stocks were on the rise today. Royal Bank of Scotland (LON:RBS) and Standard Chartered (LON:STAN) led the banking stocks, rising 2%. Lloyds (LON:LLOY) and Barclays (LON:BARC) added 1.4% each. HSBC (LON:HSBA) rose marginally.

Legal & General (LON:LGEN) was the top riser in the insurance sector with a 1.5% gain. Aviva (LON:AV), Old Mutual (LON:OML), Prudential (LON:PRU) and Standard Life (LON:SL) tacked on nearly 1%.

RSA Insurance Group (LON:RSA) posted a small loss, while Admiral Group (LON:ADM) declined 1.1%.
Private equity group 3i (LON:III) added 1%.

Small Cap News

Amphion Innovations’ (LON:AMP)wholly owned subsidiary DataTern has settled pending patent infringement litigation over two of its US patents, generating revenues of US$0.5 million. Since 2008, 22 licenses of these patens have been signed, resulting in revenues of US$14 million for DataTern.

Mariana Resources (LON:MARL) plans to accelerate the drilling programme at the Las Calandrias gold-silver project, with a second rig due to arrive at Calandria Sur next month. The second rig will also take part in drilling the Las Calandrias Dome Field.

Rockhopper Exploration’s (LON:RKH) flow tests on the potentially world class Sea Lion field in the North Falklands basin ran into some minor problems, the group revealed today. Tests on well 14/10-2 were supposed to be carried out over four perforated intervals totalling 77m between 2,403m and 2,566m. However a gun misfire meant only the top two intervals were perforated.

Minera IRL (LON:MIRL, TSX:IRL) took a “pragmatic approach to this high risk end of the business”, deciding against exercising its options to acquire the La Falda and Killincho projects project in Argentina and Peru respectively.

African Copper (LON:ACU) reported that its Mowana mine in Botswana is rapidly progressing towards commercial production levels and that mining operations have commenced at the nearby Thakadu deposit.

XCAP Securities (LON:XCAP) joined the AIM market last week, and shares in the group rallied today to eclipse the listing price of 4.5 pence. XCAP is an independent stockbroking, corporate advisory and market-making business.

Nautical Petroleum (LON:NPE) and Providence Resources (LON:PVR, ESM:PZQA) told investors that a new exploration prospect, offshore Ireland, may contain up 74 billion cubic feet of gas. The Marlin prospect in the North Celtic Sea Basin is hosted on the same license as the Baltimore heavy oil discovery, and it is located just 10km away from key infrastructure at the producing Kinsale Head gas field.

FinnCap is bullish on the expansion potential of Mariana Resources’ (LON:MARL) Las Calandrias gold-silver project in Patagonia. Eleven holes are now complete at the Calandria Norte prospect, where previous drilling encountered bonanza near surface gold and silver grades. The broker expects the initial batch of assays that will be released in October to be similar to those already reported.

Eurasia Mining (LON:EUA) has been working on finalizing the mining licence for the West Kytlim project in the Urals in Russia during the first half of the year, expecting the process to conclude very soon. “Management believe the delay is worthwhile if it allows us to achieve the best outcome for the years of planned platinum production ahead of us,” said the company.

Petro Matad (LON:MATD) said that the European Bank for Reconstruction and Development (EBRD) will conditionally subscribe for 3.36 million new share sin the company worth a total US$7 million, taking the aggregate amount raised by the company in its September fundraising to US$54 million.

Gulfsands Petroleum (LON:GPX) is one of the top picks on London’s AIM market, according to Arbuthnot Securities oil & gas expert Dougie Youngson. Youngson has upgraded his core valuation to 344p per share in the wake of yesterday’s update on the potential gas discovery in Tunisia and the company’s recent interims.

Westhouse Securities has raised its price target on GGG Resources (LON:GGG)  for the second time this year to an ultra-bullish 26.5p a share after it re-assessed the potential of the Bullabulling gold project in Australia. The valuation moves from 18p a share previously and 5.8p a share at the start of the year.

Equatorial Palm Oil (LON:PAL) chairman Michael Frayne expects considerable news-flow over the coming months as operations expansion drives momentum. This morning, the company released its interim results for the first six months to 31 June 2010, saying it is on schedule to start crude palm oil production by the end of 2010.

Regency Mines PLC (LON:RGM) placed a further 10 million shares in the company, at 1.25 pence each, for a subscription amount of £125,000 before expenses, with the money to be used for general working capital purposes.

Large and Mid Cap News

It appears that Dana Petroleum (LON:DNX) will have to concede defeat in its fight against the hostile £1.7 billion Korean takeover bid, after the £18.00 per share offer was declared unconditional.

Mining giant Rio Tinto (LON:RIO, NYSE:RTP, ASX:RIO) announced it is to invest US$230 million in Dampier Port expansion works that will result in an additional five million tonnes annual iron ore capacity (Mt/a), taking total the total annual capacity of the Pilbara iron ore operations to 230 Mt/a in Q1 2012.

The world’s largest miner BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP & BBL) has approved the development of the Macedon gas field in the Exmouth Sub-basin, Western Australia, where production is expected in 2013. Macedon will commercialise natural gas from offshore production lease WA-42-L.

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