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FTSE 100 plunges as miners, energy stocks, banks and insurers tumble

Overview: the FTSE 100 extended Tuesday’s losses, shedding a further 1.3% to drop to just over 5,300 as metals and oil prices continued falling, dragging down miners and oil & gas stocks.

Just three FTSE 100 constituents gains more than 1%. Silver producer Fresnillo (LSE: FRES), miner BHP Billiton (LSE: BLT) and oil and gas supermajor BP (LSE: BP) accomplished the feat, rising 2.6%, 1.4% and 1.2% respectively.

Copper miner Kazakhmys (LSE: KAZ) was at the bottom with a 5% decline. Hospitality company Whitbread (LSE: WTB) followed, sliding 4%. Supermarket chain Morrison’s (LSE: MRW), power generation company International Power (LSE: IPR) and asset management firm Schroders (LSE: SDR) lost slightly more than 3%.

US markets were in decline in early trade. The Dow Jones Industrial Average lost 0.5%, the broader S&P 500 index retreated 0.6% and the technology heavy NASDAQ composite lost 0.95%.

Commodities

Oil prices retreated under pressure from plummeting equity markets and later got another hit from an inventories report released by the American Petroleum Institute (NYSEMKT:API), which revealed a higher than expected increase in US crude stockpiles. API said that inventories added nearly 3 million barrels last week, signalling weaker demand. Gasoline stocks and distillates, which include diesel and heating oil, were up by 1.84 million barrels and 1.3 million barrels respectively.

A more closely watched report from Energy Information Administration (NYSEMKT:EIA) is due out today.

BP's (LSE: BP) ongoing oil spill disaster in the Gulf of Mexico, where oil is on course to reach the coast of Louisiana, has triggered concerns about a possible decline in oil supplies and restrictions on offshore drilling in the US, though recent inventories reports have shown otherwise.

June Brent Crude dropped to US$83.65/barrel, while US light, sweet crude fell to US$81.12/barrel.

Blue chip oil and gas producers were in decline. BP (LSE: BP) went against the tide, posting a small gain after suffering heavy losses over the past week on the Gulf of Mexico oil spill disaster. Fellow supermajor Shell (LSE: RDSB) lost 3.3%, as did Tullow Oil (LSE: TLW). Cairn Energy (LSE: CNE) moved down 2.6% and BG Group (LSE: BG) declined 1%.

Oil and gas engineering firms Amec (LSE: AMEC) and Petrofac (LSE: PFC) slipped 1.3% and 2.5% respectively.

JKX Oil & Gas (LSE: JKX) was the heaviest faller among the midcaps with a 5.2% decline. Dragon Oil (LSE: DGO) and Salamander Energy (LSE: SMDR) were down 3.2%, Dana Petroleum (LSE: DNX) dropped 2.8%, Premier Oil (LSE: PMO) slid 2.3% and Heritage Oil (LSE: HOIL) posted a small loss, as did Soco International (LSE: SIA).

Services companies Wellstream Holdings (LSE: WSM) and Wood Group (LSE: WG) lost 2.5% and 1.3% respectively.

Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO) went against the tide with a gain of nearly 7%.

Most other juniors were in decline. Europe focused oil and gas developer Ascent Resources (AIM: AST) and Aminex (AIM: AEX) lost about 8%, Eastern Europe focused junior Aurelian Oil & Gas (AIM: AUL) declined 7%, Atlantic Canada operating oil and gas group Enegi Oil (AIM: ENEG), North American based explorer Nighthawk Energy (AIM: HAWK) and Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) all lost more than 6%. Western Europe operating oil and gas company Northern Petroleum (AIM: NOP), Mongolia-focused Petro Matad Ltd (AIM: MATD) and Ukraine focused gas producer, Regal Petroleum (AIM: RPT), which today updated investors on its operations in Ukraine, shed over 5%.

Gold steady at $1,170

Gold prices are aiming for a return to the new 2010 high of US$1,192/oz that was set yesterday before the yellow metal slipped below US$1,170/oz after failing to find enough support to test US$1,200/oz plateau it reached in late 2009.

Gold is increasingly seen as a safe-haven asset by investors amid rising volatility in currency and stock markets, which are heavily impacted by the ongoing European debt crisis. In the latest development, Greece agreed to massive budget cuts that will amount to €30 billion over the next three years on top of the economic austerity measures already implemented in order to secure a €110 billion bailout from the European Union and International Monetary Fund (NYSE:IMF). Germany, which will account for the bulk of the financial aid package, said it would not provide any funds for Greece unless it passes economic reforms to keep its soaring budget deficit under control, forcing the country to radically cut spending.

Mass protests against the new austerity measures broke out in Greece today, leaving at least three people dead.

Gold has returned to US$1,170/oz, while silver and platinum declined to US$17.51/oz and US$1,649/oz respectively.

All major mining stocks declined with the sole exception of silver miner Fresnillo (LSE: FRES), which advanced 1.6%. Randgold Resources (LSE: RRS) shed less than 1%, while platinum miner Lonmin (LSE: LMI) declined 3.7%.

Specialty chemicals firm Johnson Matthey (LSE: JMAT) moved down 3.7%.

Silver producer Hochschild Mining (LSE: HOC) lost 5.3%, while fellow midcaps gold miner Petropavlovsk (LSE: POG) and Aquarius Platinum (LSE: AQP) pulled back 4.7% and 3.9% respectively.

Africa operating gold and platinum miner Goldplat (AIM: GDP), Russia operating Ovoca Gold (AIM: OVG) and Africa focused gold miner Pan African Resources (AIM: PAF) moved with the sector, sliding 6%. South American based explorer Mariana Resources (AIM: MARL), which today announced a new set of positive drilling results, and Western Australia operating Norseman Gold (AIM: NGL) lost more than 5%.

Base metals plummet to weaken miners

Base metals fell sharply today with copper and nickel declining to US$3.01/lb and US$9.50/lb, while zinc fell to US$0.89/lb.

All mining stocks were in decline today except for the world’s largest miner BHP Billiton (LSE: BLT), which added 1.1%. Rio Tinto (LSE: RIO) was flat and Vedanta Resources (LSE: VED) posted a marginal loss. Eurasian Natural Resources (LSE: ENRC) and Anglo American (LSE: AAL) lost 1.3% and 1.9% respectively. Antofagasta (LSE: ANTO) and Xstrata (LSE: XTA) dropped about 3%, while Kazakhmys (LSE: KAZ) shed 5.6% to slide to the bottom of the pile.

London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, shedding 7.6%.

Philippines operating nickel miner Rusina Mining (ASX: RML; AIM: RMLA) declined 13.5%, while Australia focused coking coal producer Caledon Resources (AIM: CDN) and Laterite nickel specialist European Nickel (AIM: ENK) followed with losses of 8.5%. Finders Resources (AIM: FIND) and Mineral sands producer Kenmare Resources (LSE: KMR) declined 6.5% and 6% respectively. Forte Energy (AIM: FTE) was down 5.2%.

Banks, insurance, private equity

Standard Chartered (LSE: STAN) was at the bottom of the banking sector with a 3.2% decline. Barclays (LSE: BARC) and HSBC (LSE: HSBA) dropped 1.9% and 1.1% respectively. Royal Bank of Scotland (LSE: RBS) posted a marginal loss, while fellow part-nationalised bank Lloyds (LSE: LLOY) shed 2.3%.

Insurance companies followed the market trend. Prudential (LSE: PRU) retreated 2%, Admiral Group (LSE: ADM), Aviva (LSE: AV), Legal & General (LSE: LGEN) and Standard Life (LSE: SL) lost nearly 1.5%. RSA Insurance Group (LSE: RSA) declined 1.2%. Old Mutual (LSE: OML) managed to stay at the opening level.

Private equity group 3i (LSE: III) lost nearly 3%.

Small Cap Movers

Other notable movers among the small caps included IP commercialisation company Amphion Innovations (AIM: AMP), which slipped 17% and emerging speciality pharmaceutical company Alliance Pharma (AIM: APH) with a 5.2% loss.

Small Cap News

Medusa Mining (ASX/AIM: MML; TSX: MLL) has found a new porphyry copper-gold target named Usa at its Philippines Co-O Mine.

Petroceltic International (AIM: PCI) has appointed Dr Robert Arnott as the company’s new non-executive chairman. Arnott joined the board in January this year as a senior non-executive director, and is now succeeding Andrew Bostock as chairman. Bostock will continue to serve as a senior non-executive director of Petroceltic.

Minera IRL (AIM, BVL: MIRL, TSX: IRL) said its pre-feasibility study for the Ollachea gold project in Peru is on track for its scheduled completion in the first quarter of 2011. Also, the company has decided to extend the on-going in-fill drilling program.

Oxford Nutrascience (AIM: ONG) said its subsidiary Oxford Nutrascience Ltd (ONL) achieved a 27% increase in full-year revenues and a number of post-period developments including manufacturing and development deals for its Chewitab chewable tablets and the submission of patent applications.

In a letter to shareholders, Victoria Oil & Gas (AIM: VOG) chairman Kevin Foo reflected on what he described as the most important six months in the company’s history.  In relation to the company’s flagship Logbaba on-shore gas project in Cameroon, Foo said that Victoria has "overcome some incredible challenges involving technical, operational and financing issues".

Sunrise Diamonds (AIM:SDS) will soon have a new name to better reflect the company’s diversification in 2009 and 2010 from diamonds to an array of projects in Australia, Ireland and as of today, Canada.

South America based explorer Mariana Resources (AIM: MARL) said the results from the first seven holes of the 2010 drilling campaign at its Los Calandrias project in Argentina were positive and continued demonstrating wide intersections of gold and silver mineralisation, indicating bulk tonnage potential.

British Coal Bed Methane (NYSE:CBM) gas specialist IGas Energy (AIM: IGAS) has now been operating itspilot CBM gas production for more than a year, a first for a UK CBM project. The company reported its full-year results for the twelve months ended 31 December 2009, in which the pilot gas production generated revenues of £828,000.

Ukraine focused gas producer Regal Petroleum (AIM: RPT) said that an independent assessment of its reserves in Ukraine commissioned earlier this year and received by the company this week was consistent with its development plan for the B-sands reservoirs, allocating 102.4 mmboe (million of barrels of oil equivalent) to an additional 'remaining possible' category and a further 151.9 mmboe to 'unrisked (P50) prospective resources' to the remaining proved & probable reserves volume of 151.3 mmboe.

London-based stockbroker Astaire Securities has initiated coverage on low-cost chromite producer Chromex Mining (AIM: CHX). The broker highlighted that its investment case is predicated on continued global demand for stainless steel, underpinned by strong Chinese demand growth. Astaire noted that in addition to Chromex’ producing Stellite mine on the Western Limb of the Bushveld complex in South Africa, the company also has a portfolio of near-production assets.

Telit Communications (AIM: TCM) has won a new order with German car manufacturer Audi, to equip the new Audi A8 with Telit’s UMTS/HSDPA-based broadband communications modules. The modules will be utilised in the new, third-generation “MMI Navigation plus” infotainment system.



Disclosure: The author holds no positions in the company