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FTSE 100 climbs as mining and energy stocks advance

Overview: as was projected in pre-trade, the FTSE 100 climbed 0.4% today after absorbing last week's news from China, which made another move to tighten its monetary policy, this time raising the reserve requirement for banks. In other news, a summit of EU finance minister kicked off in Brussels today in hopes to find a solution to the debt crisis in Greece after no definite aid package was agreed on last week after a series of negotiations.

Banking group Barclays (LSE: BARC), which is set to report record annual profits of £11 billion tomorrow, led the blue chips with a 3.8% advance. Insurer Legal & General (LSE: LGEN) and airline British Airways (LSE: BAY), which has secured regulatory approval for its merger with American Airlines, followed with gains of 2.5%.

Other notable risers included cruise operator Carnival Corp (LSE: CCL) and commercial property company Liberty International (LSE: LII), which added 2% and 1.5% respectively.

Telecom group BT (LSE: BT.A) slid to the bottom of the index with a 2.5% loss after announcing a 17 year plan of extra payments into its pension scheme. Retailer Kingfisher (LSE: KGF) and chipmaker ARM Holdings (LSE: ARM) followed with losses of 2% and 1.5%. Tour company TUI Travel (LSE: TT) and temporary power provider Aggreko (LSE: AGK) lost 1.4%, while securities services group G4S (LSE: GFS) rose 1%.

US markets were closed due to the President’s Day holiday today.

Commodities

Oil prices inched higher today, recovering from Friday’s falls on US inventory data along with news of the latest move by China to tighten its monetary policy and curb economic growth.

The US Energy Information Administration (NYSEMKT:EIA) released its crude stockpiles report on Friday, revealing a greater than expected increase of 2.4 million barrels. Gasoline stocks rose by 2.4 million barrels, which also was more than expected.

Earlier in the week, Back on Tuesday, an inventories update from API (American Petroleum Institute) showed an unexpectedly high increase in crude inventories of 7.195 million barrels last week, while a Platts survey projected a 2 million barrel rise. Gasoline stocks were up 1.552 million barrels, distillate stocks declined by 1.53 million barrels, while refinery utilization rate fell, moving down from 78% to 77%, reflecting lower demand.

The world’s second largest energy consumer China has raised the reserve requirements for banks by half a percentage point in its most recent step to cool down the ongoing growth and prevent the economy from overheating and tightening lending restrictions for banks last month.

The prices were supposed by positive news from Japan, whose GDP grew at an annual rate of 4.6% in Q4.

April Brent Crude reaches US$72.85/barrel, while US light, sweet crude for April delivery traded at US$74.10/barrel on the New York Mercantile Exchange.

Trading activity was low today due to holidays in the US and Asia.

Blue chip oil and gas producers posted small gains today. Cairn Energy (LSE: CNE) was in the lead with a 1.6% advance, while BG Group (LSE: BG) and Tullow Oil (LSE: TLW) added less than 1%, as did Shell (LSE: RDSB), while fellow supermajor BP (LSE: BP) tacked on 1%.

Amec (LSE: AMEC) added 1.9%, while fellow engineering firm Petrofac (LSE: PFC) rose marginally.

Midcaps followed the trend with the exception of Salamander Energy (LSE: SMDR), which declined 1.3%, and Heritage Oil (LSE: HOIL), which was flat.

Dana Petroleum (LSE: DNX) and Melrose Resources (LSE: MRS) added 4% and 3.5% to take the lead. Premier Oil (LSE: PMO) and Soco international (LSE: SIA) followed with gains of 2.5% and 1.1% respectively. Other FTSE 250 constituents Dragon Oil (LSE: DGO) and JKX Oil and Gas (LSE: JKX) rose marginally.

Services companies were mixed as while Wood Group (LSE: WG) added 1.3%, Wellstream Holdings (LSE: WSM) was flat.

North America focused oil & gas junior Pantheon Resources (AIM: PANR) and North American based explorer Nighthawk Energy (AIM: HAWK) led the juniors, climbing 5.5% and 4.5%. Irish oil and gas exploration company Petroceltic International (AIM: PCI) and Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) also did well, adding 4.2% and 3.5% respectively.

Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG) and Iraq operating Irish oil company Petrel Resources (AIM: PET) were in the red, slipping 6% and 5%.

Gold, silver and platinum advance despite US Dollar weakness

Gold was slightly lower this morning as the US Dollar gained against the euro ahead of a two day meeting of EU finance ministers to discuss a rescue plan for debt laden Greece, which is set to kick off in Brussels today.

The debt crisis in a number of euro zone countries, also including Spain and Portugal, has been weighing on Europe’s single currency, propping up the US Dollar and pressuring gold, which is seen as an alternative investment and moves inversely to the American currency. The euro has been on decline against the US Dollar for five consecutive weeks, while gold slipped below US$1,100/oz after reaching US$1,200/oz late last year.

However, the yellow metal recovered later in the day, recapturing the US$1,100/oz mark as the EUR/USD conversion rate remained about the same. Gold’s appeal increased due to investors’ concerns over the outcome of the meeting in Brussels.

Other precious metals also advanced with silver and platinum reaching US$15.59/oz and US$1,519/oz respectively.

Mining stocks were on the rise with the exception of midcap Aquarius Platinum (LSE: AQP), which posted a marginal loss.

Silver and gold miner Fresnillo (LSE: FRES) led the sector in the FTSE 100 with a gain of nearly 3%, while gold miner Randgold Resources (LSE: RRS) and platinum producer Lonmin (LSE: LMI) were up 1.6% and 1.3% respectively.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) rose marginally.

Gold miner Petropavlovsk (LSE: POG) climbed 1.6%, while fellow FTSE 100 constituent silver producer Hochschild Mining (LSE: HOC) rose marginally.

Uzbekistan focused gold miner Oxus Gold (AIM: OXS) was one of the leading performers among the juniors, advancing 7%. Turkey focused gold miner Ariana Resources (AIM: AAU), Africa focused gold deposit developer Cluff Gold (AIM: CLF), copper and gold miner EMED Mining (AIM: EMED) and London listed Australian gold producer Leyshon Resources (AIM: LRL) all added more than 4%.

Commodity asset development company Mercator Gold (AIM: MCR) headed in the opposite direction, slipping 8%.

Miners climb as base metals rise

Base metals followed with copper and nickel reaching US$3.10/lb and US$8.59/lb, while zinc improved to US$0.99/lb.

Rio Tinto (LSE: RIO) led the mining stocks with a 2.7% climb. Xstrata (LSE: XTA), Anglo American (LSE: AAL) and BHP Billiton (LSE: BLT) followed, gaining 1.6%, 1.4% and 1.2% respectively. Kazakhmys (LSE: KAZ) and Vedanta Resources (LSE: VED) rose marginally.

Antofagasta (LSE: ANTO) was flat, while Eurasian Natural Resources (LSE: ENRC) went against the tide with a small loss.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) continued outperforming the market, climbing 5% today to reach 240 pence per share after standing below 200 pence on Thursday.

Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) led the juniors, climbing 11%. Laterite nickel specialist European Nickel (AIM: ENK) and African Aura Mining (AIM: AAAM) also were in demand, advancing 9% and 6% respectively. Copper and gold miner EMED Mining (AIM: EMED) and cement operator Prosperity Mineral Holdings (AIM: PMHL) added 4%, while mineral sands producer Kenmare Resources (LSE: KMR) rose 2.5%.

South American focused junior miner Herencia Resources (AIM: HER) slipped 4.3% today.

Banks, insurance, private equity

Most financial stocks were in the black today. Barclays (LSE: BARC) was in the lead with a 4% climb. HSBC (LSE: HSBA), Royal Bank of Scotland (LSE: RBS) and Standard Chartered (LSE: STAN) rose marginally.

Part-nationalised bank Lloyds (LSE: LLOY) was flat.

Insurance companies were in buying mode today. Legal & General (LSE: LGEN) was in the lead with a 2.6% gain. Old Mutual (LSE: OML) advanced 1.5%, Aviva (LSE: AV) was up 1.3%, while RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) rose 1.1%.

Admiral Group (LSE: ADM) and Prudential (LSE: PRU) added less than 1%.

Private equity group 3i (LSE: III) added 1.1%.

Small Cap News

Other small cap movers among the small caps included African focussed soft commodity specialist, Agriterra Limited (AIM: AGTA) with a 9% advance and UK based electrical components producer and supplier Cinpart (AIM: CINP), which declined 14%.

Large and Mid Cap News

FTSE 250 constituent and support services company VT Group (LSE: VTG) has won a contract valued at up to £35 million to provide support to the RAF’s fleet of Tucana training aircraft over an initial period of four years, with two additional one-year options.   The contract will commence in April, under which VT Group will “guarantee” the availability of over 50 aircraft that will deliver 12,000-14,500 hours of flight training each year.

A strategic alliance has been agreed between Vodafone (LSE: VOD), Verizon Wireless (NYSE: VZ) and Qualcomm (NASDAQ: QCOM), aimed at accelerating the development and adoption of machine-to-machine (M2M) deployments internationally. The partners anticipate that this move will result in increased demand for M2M services on mobile networks across Europe and North America over the coming years.

Travel and transport company FirstGroup (LSE: FGP) started the first day of the new week on the positive note, announcing that it had been named as preferred to provide bus and coach shuttle services for the London 2012 Olympics.

Small Cap News

Junior oil and gas exploration and production company, President Petroleum (AIM: PPC) reaffirmed its commitment to securing additional reserves and production through acquisitions this morning.  2009 was difficult year for the company, which underwent a significant restructuring, completed a substantial fundraising and shook up its board of directors.

Baylon Holdings (AIM: MOLE), formerly the Molectra Group, has agreed the terms for its acquisition of privately owned Ila Security, the developer and manufacturer of personal security devices for women. The transaction will see Baylon issue up to 763.3m shares to Ila shareholders, representing approximately 82.4% of the enlarged share capital. The enlarged company will be re-named the Ila Group.

International network specialist, Norcon (AIM: NCON) has re-established an active office in Scandinavia which the company said will evolve over time into a regional sales base. This development re-opens a market for Norcon in this region, and in other European countries over a longer timeframe.

In a letter to investors, Nyota Minerals’ (AIM, ASX: NYO) Chief Executive Melissa Sturgess said that the last few months had been “a busy and exciting time”, particularly for the development of the flagship Tulu Kapi gold project, in Ethiopia. Sturgess highlighted the recent preliminary scoping study, conducted by Venmyn Rand, which demonstrated Tulu Kapi’s potential as a viable gold mine based on current resources. Furthermore the Chief Exec emphasised that the company hopes to increase the resource significantly through the ongoing drilling campaign.

African multi-commodity group, Mwana Africa (AIM: MWA) has increased the size of the resource at its Zani-Koko prospect in the Democratic Republic of Congo (NYSE:DRC).

Gaming software specialist Playtech (LSE: PTEC) is acquiring Virtue Fusion, a developer and licensor of online bingo products, for an initial consideration of £29 million in cash, and potentially £36 million depending on the EBIT performance of Virtue Fusion in 2010.

Dominion Petroleum (AIM: DPL) has signed an agreement in principle with Les Etablissments Maurel & Prom (M&P) to farm in to the Mandawa and Kisangire PSAs (production sharing agreements) onshore Tanzania, giving M&P additional interests in both projects, while reducing Dominion’s funding obligations.

Plantic Technologies (AIM: PLNT) has agreed terms with a new distribution partner in the America, realising the next phase of its expansion in its American operations. Privately owned Klöckner Pentaplast will replace DuPont (NYSE: DD) as Plantic's distributor for the rigid packaging film market in the Americas.

Kea Petroleum (AIM: KEA) has successfully completed its IPO (initial public offering) and has been admitted to trading on AIM (Alternative Investment Market of the London Stock Exchange) under the ticker KEA at 8 AM this morning.

Daniel Stewart (AIM: DAN) announced the all-share acquisition of financial consulting business MENA-RL (MENA) in a deal worth £1.1 million. MENA, which is owned by Daniel Stewart’s non-Executive director Adam Wilson, has approximately 20 clients across Europe, Africa and the six Gulf Cooperation Council (NYSEARCA:GCC) Member States. In the year ended 31st December 2009, MENA reported turnover of US$1.3, pre-tax profit of US$349,339 and had net assets of $351,515.

Edison Investment Research issued a note on Allocate Software (AIM: ALL) today, saying the healthcare workforce optimisation software provider is in “good health” and valuing it at 100 pence per share, compared to the current stock price of 72 pence.

Kalahari Minerals (AIM:KAH) has appointed Alastair Clayton as a Non-executive Director to Extract Resources (ASX, TSX:EXT), in which Kalahari holds a 40.44% equity stake. Clayton is Kalahari’s latest representative to join the board at Extract’s invitation. The appointment is designed to support the relationship between the two companies as Extract continues to develop the world-class Husab Uranium Project in Namibia.

Baltic Oil Terminals (AIM: BTC) said its performance in the second half marked a significant improvement over the first half of the year expecting to see what it said would be a substantial reduction in losses in its full year results for 2009.

Edison Investment Research released a report on North American based explorer Nighthawk Energy (AIM: HAWK), saying it had potential to evolve into a mid-tier producer over the next two or three years after making progress with de-risking its key Jolly Ranch and Revere projects in 2009, with visibility expected to improve “radically” in the coming months.

IGas Energy (AIM: IGAS) has identified a significant shale resource within its acreage, while also reporting a revised competent person’s report (CPR) with an increase gas initially in place (GIIP) estimate in the mid case by 7.5% from 3,558 Bcf (billion cubic feet) to 3,823 Bcf.



Disclosure: The author holds no positions