Overview: the FTSE 100 rallied 1.45% today, boosted by gains in the insurance sector after major Aviva (LON:AV) was upgraded by Bank of America Merrill Lynch and broker Panmure Gordon.
Asset management firm Schroders (LON:SDR) was the top performing blue chips with a 4% advance. Insurer Legal & General (LON:LGEN) and tour operator TUI Travel (LON:TT) followed with gains of just over 3%. Banking group Barclays (LON:BARC) and another insurer Prudential (LON:PRU) moved up 2.7%. Other notable risers included telecom group BT (LON:BT.A) and Essar Energy (LON:ESSR), which added about 2.5%, and airline British Airways (LON:BAY) with a 2.3% gain.
No FTSE 100 constituent lost more than 1%. Royal Bank of Scotland (LON:RBS) and specialist distribution group Bunzl (LON:BNZL) shed more than 0.5%.
As was projected in pre-trade, the Dow Jones and the broader S&P 500 indexes opened with small gains. The technology heavy NASDAQ composite rose 0.25%.
Commodities
Oil prices were on the rise, tracking today’s gains in European markets, which followed a bounce back in US shares on Friday.
Meanwhile, the euro kept gaining against the US dollar , which also contributed to the increase in oil prices. The American currency remained under pressure from Friday’s jobs reports from the US Labor Department , which showed a decline of 131,000 in non-farm payrolls, while a decrease of 60,000-70,000 was expected. June’s loss of 125,000 jobs was revised upwards to 221,000. The EUR/USD rate reached 1.3285 today.
The Fed’s Open Markets Committee is set to announce its decision on interest rates on Tuesday with analysts expecting no change to the current ultra-low levels, which could further weaken the US dollar . The interest rate decision will directly impact the commodity markets as an increase in the interest rate would signal the beginning of the withdrawal of the economic stimulus package, which could hurt energy demand. Additionally, the Fed will comment on its own assessment of the US economy.
September Brent Crude rose to US$81.03/barrel, while US light, sweet crude for September delivery reached US$81.53/barrel.
Blue chip oil and gas producers were on the rise. Supermajors BP (LON:BP) and Shell (LON:RDSB) climbed 1.5%, while BG Group (LON:BG) and Tullow Oil (LON:TLW) added just over 1%. Cairn Energy (LON:CNE) tacked on nearly 1%.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) also did well, rising 1.1% and 1.7% respectively.
Midcaps were mixed. Melrose Resources (LON:MRS), Premier Oil (LON:PMO) and Salamander Energy (LON:SMDR) lost 1%. Heritage Oil (LON:HOIL), JKX Oil & Gas (LON:JKX) and Soco International (LON:SIA) did better, advancing 1.1%, 1.4% and 2% respectively. Dragon Oil (LON:DGO) posted a small gain.
Services companies Wood Group (LON:WG) and Wellstream Holdings (LON:WSM) added nearly 1%.
Eastern Europe focused junior Aurelian Oil & Gas (LON:AUL) led the juniors with a 9% rally. Iraq operating Irish oil company Petrel Resources (LON:PET) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LON:GOO) were in the red with losses of 7% and 5% respectively.
Gold steady at $1,205
Gold pared the gains it made this morning after European stock markets surged, while futures for the leading US indexes moved up, pointing to a higher open on Wall Street.
The safe haven gold fell out of demand after European stock markets rallied with the FTSE 100 rallying 1.2%, boosted by gains in the insurance and mining sectors, with the latter benefitting from higher metal prices. Insurers were in demand after Bank of American Merrill Lynch and stockbroker Panmure Gordon (LON:PMR) raised the price targets for major Aviva (LON:AV).
Gold slid back to US$1,205/oz, while silver retreated to US$18.46/oz and platinum declined to US$1,555/oz.
Major mining stocks were in demand today. Gold miner Randgold Resources (LON:RRS) and silver miner Fresnillo (LON:FRES) added 1%, while platinum miner Lonmin (LON:LMI) climbed 1.7%.
African Barrick Gold (LON:ABG) went against the tide, posting a small loss.
Specialty chemicals firm Johnson Matthey (LON:JMAT) advanced 1%.
Gold miner Petropavlovsk (LON:POG) and silver producer Hochschild Mining (LON:HOC) stood just above the opening level, while fellow midcap Aquarius Platinum (LON:AQP) tacked on 2%.
Small cap companies didn’t move by much today. Junior diamond producer Stellar Diamonds (LON:STEL) was an exception shedding 9.5%.
Base metals rise
Copper and nickel advanced to US$3.36/lb and US$10.22/lb, while zinc rose to US$0.96/lb.
Antofagasta (LON:ANTO) led the base metal miners with a 2% gain. Anglo American (LON:AAL) and Rio Tinto (LON:RIO) added 1.4% and BHP Billiton (LON:BLT) tacked on 1.2%, as did Kazakhmys (LON:KAZ).
Vedanta Resources (LON:VED) and Xstrata (LON:XTA) moved up 1%.
Eurasian Natural Resources (LON:ENRC) stood just above the opening level.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LON:FXPO) added nearly 1%.
Indonesia operating Finders Resources (LON:FND) and Russia focused copper and nickel miner Amur Minerals (LON:AMC) followed the majors, rising 5%.
Forte Energy (LON:FTE) headed in the opposite direction, slipping 7%.
Banks, insurance private equity
Most financials were on the rise today. Royal Bank of Scotland (LON:RBS) was an exception with a 1% loss.
Barclays (LON:BARC) led the way with a 2.7% advance. HSBC (LON:HSBA) and Standard Chartered (LON:STAN) added 1.5% and Lloyds (LON:LLOY) posted a small gain.
Insurance companies were in demand today. Legal & General (LON:LGEN) was in the lead with a 3.4% gain. Prudential (LON:PRU) rose 2.8% and Aviva (LON:AV) climbed 2.2%. Admiral Group (LON:ADM), RSA Insurance Group (LON:RSA) and Standard Life (LON:SL) added just over 1%.
Private equity group 3i (LON:III) advanced 1.4%.
Small Cap Movers
Other notable movers among the small caps included environmental science and technology company Accsys Technologies (LON:AXS) with an 8% rally, African focussed soft commodity specialist, Agriterra Limited (LON:AGTA), which added 7%, and mobile email and data synchronisation group Synchronica PLC (LON:SYNC) with a 5% advance.
Small Cap News
China-based solar wafer manufacturer ReneSola (LON:SOLA, NYSE: SOL) has reported a record-breaking 22.9% quarter-on-quarter revenue growth, up to US$253.9m in the second quarter. The company made a gross profit of US$76.6m with a 30.2% gross profit margin, up substantially from the preceding quarter - when gross profit was US$35.3m and the gross margin was 17.1%.
Nighthawk Energy (LON:HAWK, OTC:NHEGY) is considering legal action against ‘de-rampers’ who have been making “persistent defamatory and untrue postings” on bulletin boards, hosted on the Interactive Investor (iii) and ADVFN websites.
Synchronica (LON:SYNC) has added further weight to its addressable market, as a major mobile-telecom’s provider Movistar Argentina - part of the Telefónica Group (MSE: TEF, NYSE:TEF) - launched an instant messaging (IM) service based on Synchronica's Java-based Windows Live Messenger client.
US operating energy junior Caza Oil & Gas (LON:CAZA TSX-V:CAZ) said the Glass Ranch disposal resulted in a 29% revenue decline in Q2, while current operational progress has remained strong with the company expecting to open up new locations and prove up large reserves.
Manufacturer of battery powered vehicles Tanfield (LON:TAN) has signed a non-binding heads of terms to consolidate its US electric vehicle business SEVUS and provider of electric vehicles, materials handling and fleet maintenance services, SEV UK, and also announced plans to float SEVUS on the US NASDAQ exchange in H1 2011.
Medical technology investor turned mineral explorer, MedaVinci (LON:MVC) has announced plans to acquire unlisted Serbia-focused gold explorer Orogen Gold. The company has agreed to buy 49% of Orogen for £370,000, with an option to acquire the remaining 51% over the next twelve months by issuing 29.2% stake in MedaVinci.
Britain’s top companies face a shortage of non-executive directors (NEDs), which may cost ‘UKPLC’ more to hire high-calibre staff in an increasingly competitive market, according to research by Norman Broadbent (LON:NBB) - a specialist head-hunter and management consultant.
Large and Mid Cap News
International oil and gas facilities service provider Petrofac Ltd (LON:PFC) said it won a US$430 million contract from Kuwait Oil Company (KOC) for the engineering, procurement and construction of effluent water and central sea water injection facilities.
Oil and gas supermajor BP (LON:BP) said today that its static kill operation aimed at plugging the Macondo well (MC252) and its cementing have been successful with pressure testing indicating an effective cement plug in the casing.
Pharmaceutical company AstraZeneca (LON:AZN) has reached agreement in principle on monetary terms with attorneys representing 17,500 Seroquel product liability claimants in the United States for US$198 million.
Oil and gas producer and FTSE 250 constituent Dragon Oil (LON:DGO) reported a 4.9% increase in H1 revenues driven by higher oil prices and said its 2010 drilling programme was on track, as were its goals to up production by 10-15% in each of the next three years.
Mitchells & Butlers (LON:MAB) has sold its non-core Hollywood Bowl business and associated assets for approximately £39m. The company will sell the chain of 24 ten-pin bowling venues for £27m in cash, and it expects to sell its remaining freehold property interests, in four of the sites, for at least £12m.
Gulf Keystone Petroleum (AIM: GKP) confirmed that it has completed its ‘re-organisation of interests’ in Kurdistan - which see the company take full control of its operating subsidiary. Amendments to its original Production Sharing Contracts (PSC) have now been approved by the Kurdistan Regional Government (KRG) and all the other parties in each of the respective PSCs.
Information group Euromoney Institutional Investor (LON:ERM) has agreed to acquire Arete Consulting Limited, which it called “the world's leading database of retail structured investment products” and said the deal fit its strategy of investing into high-growth online subscription data businesses. This is Euromoney's first sizeable acquisition since the purchases of Metal Bulletin and Total Derivatives in October 2006.