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FTSE 100 climbs as miners offset weak banks as bad-debt hit HSBC results

In trading this morning the FTSE100 climbed around 0.75%, gaining almost 40pts to 5,393.05. The gain was mainly driven by the miners, with Kazakhmys (LSE: KAZ) leading the way advancing 4% to 1,394p per share, Eurasian Natural Resources (LSE: ENRC), Fresnillo (LSE: FRES), Xstrata (LSE: XTA) and Rio Tinto (LSE: RIO) all following with approximately 3% gains respectively.

Prudential (LSE: PRU) confirmed reports that it is in advanced negotiations to acquire AIG’s (NYSE: AIG) Asian unit AIA for US$25 billion. Prudential already has an extensive Asian presence with operations in 12 countries in the region.

In relation to the deal, fellow LSE-listed insurer Resolution (LSE: RSL) ruled itself out of any potential bid for the Pru’s UK life assurance operations, contrary to speculation over the weekend. Reports suggested that Prudential may look to dispose of the UK unit upon closing the Asian deal. The insurer’s shares were suspended on the LSE today as the company finalises the deal, reports also suggest that a substantial rights issue may proposed to fund the acquisition.

Backup power specialist Aggreko (LSE: AGK) also featured among the risers on the FTSE100 index, rising 3% following a £30m contract win. The company will provide temporary power and temperature control to broadcasters at this summer’s FIFA World Cup in South Africa.

Also among the rising blue-chips, the Financial Time’s parent company Pearson (LSE: PSON) revealed a 17% increase in reported full-year revenues to £5.62, exceeding analyst forecasts of £5.5bn. The publisher achieved 13% pre-tax profit growth to £761m and EPS of 65.4p, which also beat market expectations.

Pearson said the Education division was a key driver of the group’s positive performance, as it increased sales by 7%. The company also noted that the FT and Penguin units both achieved a good competitive performance and maintained healthy margins in tough markets. The publishing group gained over 1.5% to trade at 927p following the better-than-expected figures.

The banking sector’s earnings season continued this week, with HSBC (LSE: HSBA) the next banking institution to reflect on the past twelve months. HCBC’s full-year pre-tax profits fell 24% to US$7.1bn for the year ended 31 December 2009. The high-street bank was hit by increased loan impairment charges, which off-set a good performance among its investment banking division.

On the London Stock Exchange, HSBC shares dropped 4% to trade at 689.8p and the latest set of disappointing banking results weighed on the rest of the sector. Standard Chartered (LSE: STAN), who are due to report their results later this week, fell almost 3% to 1,519p whilst both government supported Royal Bank of Scotland (LSE: RBS) and Lloyds Banking Group (LSE: LLYOY) also slipped more than 1.5%. Fellow FTSE100 constituent Barclays (LSE: BARC) was also negative.

On the AIM market, Victoria Oil & Gas (AIM: VOG) announced a £14m equity placing to institutional and private investors. The company intends to use the proceeds to complete drilling and testing operations at the Logbaba natural gas and condensate project in Cameroon.

Lipoxen (AIM: LPX) and its clinical development partner, have begun an expanded Phase II trial of its anaemia treatment ErepoXen, with trial’s results are scheduled for Q3 2010.

Red Rock Resources (AIM: RRR) 25.1% owned Jupiter Mines Ltd (ASX: JMS) is set to acquire a 49.9% stake in the Tshipi Kalahari Manganese project in South Africa. The share-based transaction is worth approximately A$490m and expected to transform Jupiter into a significant manganese and iron ore explorer and developer.

Vane Mineral (AIM: VML) advanced 20% to 5.25p, after reporting a maiden NI43-101 resource statement Wate Uranium Breccia Pipe, Arizona. The estimate, carried out by SKR Consulting, included an inferred resource of 695,000 pounds of uranium contained in 43,000 tonnes grading 0.8% eU308.

Security-device group, Eruma (AIM: ERU) gained 12.5% following a £379,000 contract win to supply lighting systems to Bristol Airport.

Elsewhere insulation and energy-efficient building supply specialists Kingspan (AIM: KGP) also rose strongly, after its full-year results revealed “tangible evidence of stability” in its markets. The company reported a 17% drop in pre-tax profits to €6.7m, although earnings per share (NYSEARCA:EPS) improved, up 7% to €0.287 compared to the previous year.

Disclosure: The author holds no postitions in the company