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London recovers from early dip after solid start in US equities

|Includes: Aviva plc (AV), BCS, HSBC, LDNXF, NDAQ, NMX, WPP

London's FTSE 100 held on to the 5,700 mark after shedding as much as 0.5% earlier in the day on Thursday's dissapointing US bond auction and today's mixed US data. It was reported that US Q4 GDP growth was revised downwards from an annualised 5.9% to 5.6%, while the University of Michigan consumer sentiment index remained unchanged at 73.6 in March.

Communications group WPP (LSE: WPP) led the blue chips, advancing 2.6%. Commercial property company British Land (LSE: BLND), Cairn Energy (LSE: CNE) and retailer Marks & Spencer (LSE: MKS) added 2%. Credit information group Experian (LSE: EXPN) followed with a gain of nearly 2%. Other commercial property stocks Segro (LSE: SGRO), Liberty International (LSE: LII) and Hammerson (LSE: HMSO) tacked on slightly more than 1%.

Cable & Wireless Communications (LSE: CWC) and Cable & Wireless Worldwide (LSE: CW) were the heaviest fallers among the blue chips with losses of 23% and 7% on their first day of trading on the LSE following the demerger of Cable & Wireless. Power generation company International Power (LSE: IPR) and hedge fund manager Man Group (LSE: EMG) followed with declines of 3.5% and 2.5% respectively.

US stocks opened higher. The Dow Jones Industrial Average and the broader S&P 500 index advanced 0.55%, while the technology heavy NASDAQ composite rose 0.45%.


Crude prices were on the rise today with US benchmark crude eclipsing US$81/barrel on the New York Mercantile Exchange (NYMEX).

Oil was lifted by an improved demand outlook amid a rally in European and Asian stock markets and bullish US jobless claims data that showed a steeper than expected decline of 14,000 in initial jobless claims last week to 442,000.

Meanwhile, the euro strengthened today, gainin on the US dollar after European Union leaders agreed on a joint €30 million bailout package with the International Monetary Fund (NYSE:IMF) for debt-laden Greece, easing worries over its fiscal crisis, which has been weighing on Europe’s single currency for weeks.

However, the deal did not significantly improve the long-term outlook for Greece’s debt situation and the euro’s gains were limited.

A stronger US dollar makes dollar denominated commodities including crude more expensive for holders of other currencies, curbing demand.

Crude prices have been under pressure from inventories reports that were released earlier this week showed a substantial build-up in US stockpiles. US Energy Information Administration (NYSEMKT:EIA) reported that crude inventories increased by 7.2 mmbbls (million barrels) compared to an expected rise of just 1.7 mmbbls. EIA said that gasoline inventories declined by 2.7 mmbbls, while distillates, which include heating oil, dropped 2.4 mmbbls.

Earlie rin the week, the American Petroleum Institute (NYSEMKT:API) reported a 7.5 mmbbls rise in crude stockpiles, adding that gasoline stocks fell 81,000 barrels, while distillates declined by 2.5 mmbbls.

May Brent Crude improved to US$80.28/barrel, while US light, sweet crude reached US$81/barrel.

Blue chip oil and gas producers didn’t show much movement today. BG Group (LSE: BG) declined 1.8%, while supermajor BP (LSE: BP) followed with a small loss. Shell (LSE: RDSB) and Tullow Oil (LSE: TLW) were flat. Cairn Energy (LSE: CNE) outperformed its peers, adding less than 1%.

Amec (LSE: AMEC) posted a marginal loss, while fellow oil and gas engineering firm Petrofac (LSE: PFC) was unmoved.

Midcaps mostly rose. Premier Oil (LSE: PMO) led the way with a 3.4% gain. Salamander Energy (LSE: SMDR) followed, tacking on 2.3%. Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) added nearly 1%, while Dragon Oil (LSE: DGO) and Heritage Oil (LSE: HOIL) were flat. Dana Petroleum (LSE: DNX) shed less than 1% and JKX Oil & Gas (LSE: JKX) was at the bottom of the pile with a 1.2% loss.

Services companies headed in different directions as while Wood Group (LSE: WG) posted a small gain, Wellstream Holdings (LSE: WSM) declined 1.4%.

Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) dropped 5.5% and 4% respectively.

Gold and silver pull back as US dollar rebounds

Gold trimmed gains after rising earlier in the day as the US dollar recouped losses on disappointing US GDP revision.

Today’s update showed a downward revision of US Q4 GDP growth from 5.9% to 5.6%, sending stock markets in both the US and Europe down and boosting the safe-haven US dollar, which was in decline against the euro today after European Union leaders came to an agreement on a bailout deal for debt laden Greece.

Gold is seen as a riskier investment alternative and usually moves inversely to the US dollar.

Spot gold retreated to US$1,093/oz after touching US$1,100/oz, while silver improved to US$16.72/oz and platinum dropped to US$1,593/oz.

Major mining stocks were in decline, save for silver producers. Blue chip Fresnillo (LSE: FRES) and peer from FTSE 250 Hochschild Mining (LSE: HOC) added 0.5% and 2.9% respectively.

Gold producer Randgold Resources (LSE: RRS) lost nearly 1%, while midcap Petropavlovsk (LSE: POG) was flat. Platinum miners Lonmin (LSE: LMI) and Aquarius Platinum (LSE: AQP) posted small losses.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) made little headway.

Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) led the juniors with a 7% advance, while Lesotho operating diamond miner Kopane Diamond Developments (AIM: KDD) and Kazakhstan operating gold producer and copper developer Frontier Mining (AIM: FML) followed with gains of over 4%.

Junior diamond producer Stellar Diamonds (AIM: STEL) and UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) headed in the opposite direction, slipping 9.5% and 9% respectively.

Tajikistan operating gold miner Kryso Resources (AIM: KYS) was down 5%, while Commodity asset development company Mercator Gold (AIM: MCR) and Africa operating gold miner GMA Resources (AIM: GMA) lost 4.5%.

Copper and nickel advance

Base metals rose today. Copper and nickel improved US$3.38/lb and US$10.61/lb, while zinc held steady at US$1/lb.

Mining stocks didn’t show much movement today. Anglo American (LSE: AAL),BHP Billiton (LSE: BLT) and Kazakhmys (LSE: KAZ) were flat. Eurasian Natural Resources (LSE: ENRC) and Rio Tinto (LSE: RIO) shed less than 1%, while Vedanta Resources (LSE: VED) and Antofagasta (LSE: ANTO) declined 1% and 1.2%. Xstrata (LSE: XTA) posted a marginal gain.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) made little headway.

Iron ore focused investor Red Rock Resources (AIM: RRR) was the top performer in the sector, surging 20%. Copper and nickel explorer Regency Mines (AIM: RGM) and Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) rallied 8% and 4.5%.

Finders Resources (AIM: FND) and tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) slipped 5% and 4% respectively.

Banks, insurance, private equity

Barclays (LSE: BARC) led the banking stocks with a 1.2% gain. HSBC (LSE: HSBA) and Lloyds (LSE: LLOY) lost less than 1%, while Standard Chartered (LSE: STAN) slid 1.6%.

Royal Bank of Scotland (LSE: RBS) was flat.

Insurers didn’t move by much. Legal & General Group (LSE: LGEN) was at the bottom of the sector with a 1% decline. RSA Insurance Group (LSE: RSA) posted a marginal loss, while Admiral Group (LSE: ADM), Aviva (LSE: AV) and Standard Life (LSE: SL) gained less than 1%.

Old Mutual (LSE: OML) and Prudential (LSE: PRU) were unmoved.

Private equity firm 3i (LSE: III) posted a marginal loss.

Disclosure: no positions