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Thursday 20th of May 2010
May 19, 2010    

Ferrexpo leads miners lower in London

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by Elaine Frei
Ferrexpo leads miners lower in London

European equities markets were lower Wednesday in the wake of Germany’s ban on naked short-sales of shares of 10 banks and insurers and on naked credit-default swaps of government bonds from Eurozone nations.

In such sales or swaps, securities are sold or bonds swapped when investors do not own or hold the securities or bonds.

German Chancellor Angela Merkel is attempting to extend the ban to the rest of Europe, citing danger for the euro and the European Union if the practice is allowed to continue, but EU officials said that a wider ban is unlikely and some European nations have indicated that they have no plans to follow Germany’s lead.

The FTSE 100 was down 2.81 percent to 5,158.08 in London, while the FTSE 250 dropped 3.23 percent to 9,670.62.

Miners were the among the biggest decliners in London, led by iron-ore miner Ferrexpo (LSE: FXPO), which was 7.54 percent lower on the 250, while Xstrata (LSE: XTA) was close behind as it led declines on the 100, dropping 7.51 percent.

Also among the biggest decliners on the 100, copper miner Kazakhmys (LSE: KAZ) was down 6.72 percent while Rio Tinto (LSE: RIO) fell 6.68 percent as fourteen miners listed in London saw shares drop by 5 percent or more on the session.

The worst performance in London on the session came for engineering group GKN (LSE: GKN), which was down 8.92 percent on the sesison.

There was one gainer in the energy sector, where wind turbine gearbox manufacturer Hansen Transmissions International (LSE: HSN) added 1.48 percent, while the biggest decliner in the sector was oil and gas construction and engineering group Lamprell (LSE: LAM), which was down 8.79 percent.

The only gainer on the 100 was in the pharmaceuticals sector, where GlaxoSmithKline (LSE: GSK) added 0.38 percent, while pubs operator Mitchells & Butlers (LSE: MAB) was the only gainer in the travel and leisure sector and the best performer in London on the session as it added 4.98 percent.

Home Retail Group (LSE: HOME) was down 7.36 percent to lead declines in the retail sector after UBS issued a downgrade on its shares, from “buy” to “neutral”, while inter-dealer money broker ICAP (LSE: IAP) dropped 4.24 percent after it said it’s full-year pretax profit fell 5 percent.

The FTSE Eurofirst 300 was down 2.91 percent to 996.73 while the IBEX fell 2.61 percent to 9,376.5, the Dax was 2.72 percent lower to 5,988.67 and the CAC-40 dropped 3,511.67.

There were no winners on either the Dax or the CAC-40.

Carmaker BMW (FWB: BMW) was the biggest decliner on the Dax, falling 6.68 percent after Bank of America Merrill Lynch downgraded its shares from “neutral” to “underperform” based on concerns about how European austerity measures would impact demand.

Spanish builder Sacyr Vallehermoso (BMAD: SYV) dropped 5.7 percent in Madrid after it cancelled its dividend on 2009 profit.

Markets in the Asia-Pacific region were lower Wednesday on news of the ban on naked short-selling and naked credit default swaps in Germany.

The Nikkei 225 was down 0.54 percent to 10,186.84 in Tokyo, while the Topix index fell 0.36 percent to 910.64 but the Mothers market added 2.63 percent to 413.72 after falling almost 12 percent in two days.

The yen remained stronger versus the euro, hurting exporters.

Panasonic (TYO: 6752), which gets nearly half of its revenues from outside Japan, was down 0.5 percent, while chip-testing equipment maker Advantest (TYO: 6857) fell 0.6 percent.

Camera manufacturer Canon (TYO: 7751), which counts Europe as its largest market, was 1.1 percent lower, and Nippon Sheet Glass (TYO: 5202), with 42 percent of its revenues coming from Europe, dropped 3.2 percent.

The Shanghai Composite was 0.27 percent lower to 2,587.81 as the real estate sector declined on uncertainties about what the government in China will do about monetary policy.

China Vanke Limited (SSE: 000002) fell 1.1 percent on the Shenzhen exchange, while Poly Real Estate Group (SSE: 600048) dropped 1.8 percent.

Taiwan’s Taiex was down 0.34 percent to 7,559.16, the Kospi fell 0.8 percent to 1,630.08 in South Korea, and Hong Kong’s Hang Seng was 1.83 percent lower to 19,578.98.

The S&P/ASX200 was down 1.87 percent to 4,387.1 in Australia, while the Sydney Ordinaries dropped 1.9 percent to 4,414.3.

Fortescue Metals (ASX: FMG) fell 4.7 percent after it said it will postpone new projects worth $15 billion because of the proposed new tax on mining profits in Australia.

The Straits Times Index was 2.45 percent lower to 2,774.54 in Singapore, while India’s Sensex fell 2.77 percent to 16,408.49.

New York markets were lower in early afternoon trade, with the Dow Jones Industrial Average down 0.92 percent to 10,414.07 at just past 1 p.m., while at the same time the S&P 500 had dropped 0.8 percent to 1,111.8 and the Nasdaq Composite was 0.96 percent lower to 2,295.04.

Crude oil prices were lower in New York trade, while metals were also lower as gold dropped more than $20 to go back below $1,200 per troy ounce.

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