Overview: just as was expected, the FTSE 100 was on the rise in early trade, rallying 1.5% after Wall Street closed higher the day before with the Dow Jones industrial average adding 1.2%, while S&P 500 and Nasdaq composite rose 0.9%. The recovery sentiment was further improved by the Reserve Bank of Australia, which unexpectedly lifted its interest rate by 25 basis points.
Oil and metals prices reacted by inching higher to boost the mining and energy sectors, which were off to a strong start this morning.
Mining companies dominated the leaderboard with copper miner Kazakhmys (LSE: KAZ) furmly in the lead with a 7.2% rally. Fellow copper producer Antofagasta (LSE: ANTO) and gold miner Randgold Resources (LSE: RRS) also made it to the top three with gains of over 5%.
Software developer Invensys (LSE: ISYS), turbine manufacturer Rolls-Royce (LS: RR) and property company Segro (LSE: SGRO) were the only non-mining stocks to make it to the top ten with gains of over 4%.
Only five FTSE 100 constituents were in the red this morning. Shire Pharmaceuticals (LSE: SHP) and insurer Legal & General (LSE: LGEN) were at the bottom of the pile, shedding 2.4% and 1.9% respectively.
US stock index futures inched up this morning, pointing to a higher start on Wall Street and further strengthening the Footsie.
Oil prices stayed on the rise in the morning with November Brent Crude stopping just a few cents short of US$67/barrel, while US light crude for November delivery reached US$71.34/barrel.
Supermajors BP (LSE: BP) and Shell (LSE: RDSB) posted identical gains of about 1.8%, responding to the increase in oil prices. Fellow FTSE 100 constituents Tullow Oil (LSE: TLW), Petrofac (LSE: PFC), Cairn Energy (LSE: CNE) and BG Group (LSE: BG) also added more than 1.5%.
In the FTSE 250, Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO) rose marginally, while Heritage Oil (LSE: HOIL) outperformed the sector with a 5% gain.
US focused oil and gas company Caza Oil & Gas (AIM: CAZA) soared 48% to emerge as the leading riser among the juniors. Latin America operating Gold Oil (LSE: GOO) and South America and Gulf of Mexico operating Irish gas company Pan Andean Resources (AIM: PRE) both rallied 12%. US focused junior Empyrean Energy (AIM: EME) rose 4%.
Gulfsands Petroleum (AIM: GPX), an oil and gas company with assets in Iraq, Syria and Gulf of Mexico, added 3%, as did EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG). Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) and energy investor Xtract Energy PLC (AIM: XTR) both climbed 2.8%.
Iraq and Algeria operating Gulf Keystone Petroleum (AIM: GKP), which reported an oil discovery in the Kurdistan region in northern Iraq today, climbed 5.5%. Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) shed 5%, correcting after yesterday’s strong gains. North American focused oil & gas junior, Pantheon Resources (AIM: PANR) lost 4.5%.
Gold and SIlver climb to boost miners
Gold continued its climb, reaching US$1,026/oz. Silver was just 5 cents short of US$17/oz, while Platinum improved to US$1,307/oz.
Gold miners were hot in early trade, boosted by the surging gold price with blue chip Randgold Resources (LSE: RRS) adding 5.4% to emerge as the leading risers among the miners in the FTSE 100. Fellow yellow metal producer from the FTSE 250 Petropavlovsk (LSE: POG) climbed 5.7%.
Platinum miner Lonmin (LSE: LMI) rose 2.8%, as did another FTSE 100 constituent silver miner Fresnillo (LSE: FRES).
Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose 2.3%.
Mid cap silver producer Hochschild Mining (LSE: HOC) also did very well in early trade, rising 5%. Fellow FTSE 250 platinum miner Aquarius Platinum (LSE: AQP) added 1.4%.
Copper and gold miner EMED Mining (AIM: EMED) and Philippines focused gold producer Medusa Mining (AIM&ASX: MML) were among the top performers among the small caps, with each climbing 5%. Western Australia operating Norseman Gold (AIM: NGL) and Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) followed, advancing 4% and 3% respectively.
Turkey focused gold miner Ariana Resources (AIM: AAU) and African focused diversified miner Nyota Minerals (AIM: NYO) were in decline, shedding 9% and 6% respectively.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS), whose target price was upped by broker Fox-Davies today, which also retained its “buy” recommendation for the company, slid 2.5%, as did Africa operating gold miner GMA Resources (AIM: GMA).
Copper and Nickel rise
Base metals prices also increased. Copper improved to US$2.72/pound, Nickel rose to US$8.05/pound, while Zinc was just short of US$0.85/pound.
Copper miners Kazakhmys (LSE: KAZ) and Antofagasta (LSE: ANTO) were in the lead, climbing 7% and 5% respectively. Anglo American (LSE: AAL) and Vedanta Resources (LSE: VED) followed with gains of over 4%. Eurasian Natural Resources (LSE: ENRC), Xstrata (LSE: XTA) and Rio Tinto (LSE: RIO) also did well with all advancing over 3%.
The world’s largest miner BHP Billiton (LSE: BLT) wasn’t very volatile with a 2.4% gain.
Shares in London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) were in demand in early trade, helping it to a 5.5% climb.
Indonesia operating coal miner Churchill Mining (AIM: CHL) was one of the leading risers among the juniors with a 7% rally. South American focused Herencia Resources (LSE: HER) and Uranium and copper explorer Kalahari Minerals (AIM: KAH) added almost 4%, while coking and thermal coal producer New World Resources (LSE: NWR) tacked on 3.3%.
Russian focused copper and nickel miner Amur Minerals (AIM: AMC) and copper and nickel explorer Regency Mines (AIM: RGM) went in a different direction, shedding 4% and 3.7% respectively.
Banks, insurance, private equity
Royal Bank of Scotland (LSE: RBS) and Barclays (LSE: RBS) led the banks with gains of 2.5%. Standard Chartered (LSE: STAN) rose 2.3%.
HSBC (LSE: HSBA) climbed 1.3%, while bailed out bank Lloyds (LSE: LLOY) added 1%.
Insurers were mixed.
Old Mutual (LSE: OML) and Prudential (LSE: PRU) were in the lead with both advancing 2.2%. Aviva (LSE: AV), RSA insurance Group (LSE: RSA) and Standard Life (LSE: SL) rose marginally.
Friends Provident (LSE: FP) started the day with marginal declines, while Legal & General (LSE: LGEN) was at the bottom of the pile with a 1.7% slide.
Private equity group 3i (LSE: III) rose marginally.
Large and Mid Cap News
Tesco (LSE: TSCO), the UK’s largest retailer released their H1 interim results this morning, in which they reported a 14% increase in overall group trading profits. Tesco’s UK operations experienced a competitive market. Sales performance ‘converged with industry’, with moderate like-for-like sales growth of 2.7%. Internationally Tesco made strong gains in market share, particularly in Asia.
Rio Tinto PLC (LSE, ASX: RIO) said it has signed an investment agreement with the government of Mongolia for the development of the Oyu Tolgoi copper-gold complex in the South Gobi region. Together with its development partner Ivanhoe Mines Ltd (NYSE, TSX: IVN), the company will assess the conditions present at the site and commence the development phase.
JKX Oil & Gas plc (LSE: JKX) announced the results of its first well test in the Koshekhablskoye field, located in Russia’s Republic of Adygea. Well 27 is the first of 10 workover wells to be tested in the Koshekhablskoye field following the JKX acquisition in 2007.
Chloride Group Plc (LSE: CHLD) updated investors ahead of next months interim results. Trading in the first half has been in line with the Board's expectations, Total sales rose marginally including 3% increase from acquisitions and around 7% from the beneficial effects of exchange rate on translation.
Small Cap News
European Goldfields Limited (AIM & TSX: EGU) announced the successful conclusion of the principal phase of the permitting process for its Skouries and Olympias Projects in Greece. Investors welcomed the news - shares in the London and Toronto listed Gold developer rose 5% in this morning’s trade.
Iraq and Algeria operating oil and gas junior Gulf Keystone Petroleum (AIM: GKP) announced yet another oil discovery in the Kurdistan region of northern Iraq, where it just started drilling the Triassic section of the Sheikan-1 exploration well.
Emerging copper producer Discovery Metals (ASX/BSE: DML, AIM: DME) has provided investors with more detail on the Bankable Feasibility Study for its Boseto Copper Project.
Substantial shareholder Resource Capital has significantly upped its stake in Finders Resources (ASX & AIM: FND). Resouce Capital acquired 9.9 million shares in Finders at an average price of 33 cents per share between July and October 2009.It now owns 18.9 million shares, or 10.50% of Finders.
Shares in Caza Oil & Gas Inc (TSX: CAZ; AIM: CAZA) soared on this morning’s news of an oil discovery at the Lucky Penny 10 State #1 horizontal well in Lea County, New Mexico.
This morning Central China Goldfields (AIM: GGG) announced the appointment of their new Non-executive Chairman, Dr. Peter Antony Ruxton. The China focused gold explorer is working toward a new direction following the sale of the Nimu project. Dr Peter Ruxton has extensive experience in the natural resources sector and mining private equity.
Empyrean Energy PLC (AIM: EME) said Texas Crude Energy Inc (TCEI), the operator of Block B on the Sugarloaf project that is part of the onshore Sugarkane gas & condensate field in Texas, has begun planning and initial preparatory work on the stimulation and completion program for the three existing horizontal wells within Block B.
South American focused junior miner Herencia Resources (AIM: HER) has hired a consultancy to help plan and optimise the next drilling campaign and review the gold mineralization at its flagship Paguanta project in Chile, where it has recently secured the remaining exploitation tenements to cover the entire project area.
Medical and technology businesses developer Amphion Innovations (AIM: AMP) said today pre-clinical trials showed that its partner company WellGen’s propriety black tea concentrate significantly improved glucose control after the WellGen theaflavin-rich black tea concentrate favourably affected critical biomarkers of diabetes, allowing it to move forward to human clinical studies of medical food for diabetes.
Northern Petroleum PLC (AIM: NOP) said that, together with Shell Italia E&P SpA, it will be acquiring a 3D seismic survey in their joint exploration area offshore Sicily.
African focused junior diversified miner Nyota Minerals (AIM & ASX: NYO) said an independent technical review confirmed that Tulu Kapi represented a highly prospective gold project within Ethiopia, whose current mineral resources could be increased with numerous positive indications of mineralisation identified beyond the immediate area of the project.
LonZim Plc (AIM: LZM) said it has appointed David James Armstrong as finance director with immediate effect. Armstrong is currently FD at Lonrho PLC (AIM: LONR).