London close: European worries hit Footsie

Date: Monday 07 Jun 2010

Worries over the European debt situation – now focused on Hungary – helped ensure that London’s leading share index closed sharply in the red despite an earlier rally.

Mining stocks were largely responsible for the poor performance, with Kazakhmys, Lonmin, Vedanta and the two sector giants BHP Billiton and Rio Tinto among the worst performers as traders reduce their exposure to metals.

The company formerly known as Peter Hambro Mining is going well, however, after receiving an equity injection. Hong Kong based investors are to pump $60m into Petropavlovsk to finance the group’s iron ore projects in China.

BP gave up early gains that came after it had some success in stemming the flow of oil into the Gulf of Mexico. The latest attempt to stop the leak is only capturing half the oil, but that is a lot more than last week.

The Gulf of Mexico oil spill has now cost BP a staggering $1.25bn (Ł865m) and is expected to keep rising for many months to come.

Banks rallied butBarclays missed out after a downgrade from Evolution Securities. The broker has done an about turn, switching from a “buy” recommendation to a “sell”, and has cut its target price from 482p to 340p. The banking sector was initially knocked in early trading by concerns that a banking levy would be introduced in the Budget on 22 June but losses have been pared, while Royal Bank of Scotland is marginally firmer on the day.

Life insurer Prudential closed lower after its annual meeting and trading update. Most of the resolutions at Prudential's AGM were passed with little opposition but there was a significant rebellion against renewing the life insurer's power to allot ordinary shares for rights issues.

Sales for the first five months of 2010 rose 27% to Ł1.37bn, with Asia and the US the main drivers. Asia sales rose by 33% to Ł579m and US sales by 41% to Ł454m. The UK was more steady, with sales up 4% to Ł322m.

Oil engineering services provider Lamprell said performance has been in line with expectations since its last statement in April. “We continue to see high levels of enquiries for our services in most sectors of our business but, most importantly, our efforts to diversify the scope of our operating markets is beginning to bear fruit, as evidenced by the contracts wins we have secured, so far, in 2010,” said the group.

Oil and gas explorer and producer Regal Petroleum’s latest update on its SV-66 well in the Ukraine has been well received. The well delivered better than expected test rates and is now in production, Regal said. The shares received an additional boost from news that its 50%-owned subsidiary encountered a gas bearing reservoir in the Suceava Block in Romania.

Electrical components maker e2v technologies saw sales fall 14% for the year, reflecting the anticipated reduction in demand. Sales for the year dropped to Ł201.2m from Ł233.2m before. Adjusted operating profit slipped 45% to Ł15m. But pre-tax losses narrowed 66% to Ł9.7m from Ł28.4m previously due to lower exceptional costs.

IT services company Phoenix IT reported a 4% increase in full year profit and lifted its dividend as it continues to look at potential acquisitions.

Gulf Keystone racked up big losses last year as it took a $73.9m hit for pulling out of Algeria and switched focus to its hugely promising Iraq-Kurdistan acreage.

Financial adviser Begbies Traynor said results for the year to April are expected to be ahead of last year and in line with expectations. The group also announced today that chief financial officer John Gittins will leave to become the finance director of NCC Group. Nick Taylor, currently the Group`s financial controller, will take the position of acting Finance Director until a permanent appointment is made.

FTSE 100 - Risers
ARM Holdings (ARM) 272.80p +3.10%
G4S (GFS) 266.50p +1.91%
Aggreko (AGK) 1,354.00p +1.80%
Randgold Resources (RRS) 5,955.00p +0.93%
Admiral Group (ADM) 1,323.00p +0.61%
RSA Insurance Group (RSA) 118.70p +0.59%
Autonomy Corporation (AU.) 1,803.00p +0.22%
Petrofac Ltd. (PFC) 1,192.00p +0.17%
WPP Group (WPP) 658.00p +0.08%
Centrica (CNA) 281.40p -0.04%

FTSE 100 - Fallers
Kazakhmys (KAZ) 1,074.00p -4.02%
Prudential (PRU) 534.00p -3.96%
Xstrata (XTA) 919.00p -3.39%
Lonmin (LMI) 1,543.00p -3.20%
Vedanta Resources (VED) 2,106.00p -3.17%
SEGRO (SGRO) 267.30p -2.98%
Lloyds Banking Group (LLOY) 53.96p -2.67%
Antofagasta (ANTO) 832.00p -2.63%
Schroders (SDR) 1,306.00p -2.61%
Eurasian Natural Resources (ENRC) 961.00p -2.49%

FTSE 250 - Risers
Dunelm Group (DNLM) 370.00p +6.02%
Rightmove (RMV) 724.00p +2.55%
WH Smith (SMWH) 454.00p +2.25%
Micro Focus International Plc (MCRO) 500.00p +2.08%
Lancashire Holdings (LRE) 483.30p +1.83%
Hansteen Holdings (HSTN) 68.00p +1.49%
BH Global USD Shares (BHGU) 10.95 +1.20%
Mothercare (MTC) 526.00p +1.15%
Tullett Prebon (TLPR) 334.50p +0.94%
Chloride Group (CHLD) 288.60p +0.91%

FTSE 250 - Fallers
Premier Foods (PFD) 20.10p -6.86%
Melrose Resources (MRS) 252.70p -6.41%
Trinity Mirror (TNI) 90.25p -6.23%
Taylor Wimpey (TW.) 30.22p -5.97%
Lamprell (LAM) 202.30p -5.91%
Redrow (RDW) 124.90p -5.88%
St. Modwen Properties (SMP) 168.30p -5.45%
Punch Taverns (PUB) 64.65p -4.79%
Regus (RGU) 82.00p -4.60%
BlueBay Asset Management (BBAY) 272.50p -4.39%