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US shares mixed as trading begins; JP Morgan in focus

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US shares painted a mixed picture as trading opened on Friday as traders seem unsure which way to turn.

Investors are keen to hear more on what the lawmakers come up with to solve the debt ceiling and shutdown issues and have decided to act with caution for now.

The Dow Jones gained eight to stand at 15,136, while Nasdaq and S&P500  were both down a point.

On the corporate front, JP Morgan was the talking point after it posted a loss in Q3 after putting buy US$9.2billion to cover legal costs.

JPMorgan now has a contingency fund of $23bn to cover legal expenses.

On S&P, the top riser was Safeway Inc, which gained 5.2%, while Gap Inc  lost 6.9% after it reported that September 2013 net sales were flat compared with last year. 

Meanwhile, in the UK, aided by a 30% or so instant windfall this morning for Royal Mail investors, Footsie made good ground today.

London’s main index was 48 points higher at 6,478, with talk of a compromise possible in the US debt impasse adding to the general celebratory mood.

While the developments in the US may be more important in the longer term, it was the Royal Mail’s (LON:RMG) barnstorming opening that dominated the morning.

Priced at the top end of the range at 330p, shares were changing hands at up to 460p in early trades before settling back down to about 445p in a frenzy of a dealing.

Reports suggested more than 100mln shares changed hands in the first hour, with demand sufficient to crash wealth management group’s Hargreaves Lansdown’s website.

Anyone who applied and received the minimum allocation would have banked about £270 if they had sold this morning, with demand helped by the string of institutions that reportedly failed get any allocation at all.

Royal Mail will go straight into the FTSE100 at its current price, which will also encourage buying from index tracker funds. 

Full trading in the shares starts on Tuesday.

Away from the postie frenzy, Whitbread (LON:WTB) moved to the top of the risers after Citigroup raised it price target on the coffee to hotel chain to £37.50, while its rating is now buy.

”Improved sentiment around the European economies suggests that we could be at the start of a renewed upgrade cycle for European focused hotel names,” Citi reckons. Shares rose 92p to 3,206p.

Wickes owner Travis Perkins (LON:TPK) got a boost from a bullish write-up from Liberum, though BAE Systems (LON:BA.) was a loser after its mixed trading update yesterday.

BAE may also have been affected by a profit warning from weapons maker Chemring (LON:CHG), which added it had no idea how badly it will be affected the US shutdown.

Gem Diamonds (LON:GEMD) was a riser after it sold two world-class stones unearthed at the company’s Letseng mine in Lesotho for a combined US$12.3mln.

The rare 12.47-carat blue diamond fetched a record price for Letseng of US$ 603,047 per carat, giving a total of US$7.5mln. The “exceptional quality” 82-carat white diamond fetched US$ 59,173 per carat, for a total of US$ 4.8mln. Shares rose 2% to 154p.

Shares in Baobab Resources (LON:BA.) surged after it unveiled a major investment from a main shareholder that could fund the DFS for its pig iron project in Mozambique through to completion. Redbird is wholly owned by the African Minerals Exploration & Development fund, which owns 26.73% of Baobab's voting rights. Shares were up 8%.

Amur Minerals (LON:AMC) was another riser as it said it had completed drilling on a fifth target at Kun-Manie nickel-copper sulphide project in the far east of Russia.

Coloured gemstone specialist Gemfields, (LON:GEM) meanwhile, made ground after being awarded AIM transaction of the year for 2013 for its US$90mln acquisition of Faberge. 

Quick facts: JPMorgan Chase & Co

Price: 122.34 USD

NYSE:JPM
Market: NYSE
Market Cap: $372.92 billion
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