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Thursday 10th of June 2010
June 8, 2010    

Melrose Resources leads energy declines; BP drops 5 percent

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by Elaine Frei
Melrose Resources leads energy declines; BP drops 5 percent

European equities markets were lower Tuesday on continuing concerns about the debt crisis in the region and how it will hurt economic growth, especially after Fitch Ratings issued comments indicating that the crisis could spread to Europe’s largest economies and that the UK needs to speed up plans to shrink its budget deficit and after British Prime Minister David Cameron said that the UK faces years of budget cuts.

In Germany, meanwhile, exports were reported down 5.9 percent in April, while the German government proposed new taxes on nuclear power as a way of generating more revenue.

The FTSE 100 was 0.81 percent lower to 5,028.15 in London, while the FTSE 250 was down 1.28 percent to 9,356.17.

The energy sector was mostly lower, led down by Melrose Resources (LSE: MRS), which dropped 6.21 percent, followed by BP (LSE: BP), which turned in the worst performance on the 100 with a decline of 4.97 percent after comments from US President Barack Obama that indicated he is looking for where to place blame for the oil spill from one of BP’s wells in the Gulf of Mexico.

The US has promised a full inquiry into the matter.

Gains on the 100 were led by gold and silver miner Fresnillo (LSE: FRES), which added 4.62 percent while Hochschild Mining was up 4.5 percent and Randgold Resources (LSE: RRS) gained 2.27 percent, but iron-ore miner Ferrexpo (LSE: FXPO) led declines in the sector as it dropped 1.77 percent.

Pubs operator Punch Taverns (LSE: PUB) led declines in the travel and leisure sector as it fell 7.12 percent, while travel agents TUI Travel (LSE: TT) and Thomas Cook Group (LSE: TCG) dropped 3.5 percent and 2.95 percent respectively and the only gainer in the sector was gambling business Rank Group (LSE: RNK), which added 0.17 percent.

Most banks were lower, led by Lloyds Banking Group (LSE: LLOY) with a decline of 4.08 percent.

The biggest gain in London came from Chloride Group (LSE: CHLD), which added 19.37 percent on the 250 after the backup power equipment manufacturer was acquired by a Swiss group, while the biggest decliner on the 250 and in London was directories publisher Yell Group (LSE: YELL) with a decline of 7.48 percent.

The FTSE Eurofirst 300 was down 1.12 percent to 979.44 while the Dax fell 0.62 percent to 5,868.55, the CAC-40 was 0.98 percent lower to 3,380.36 as it saw only five stocks gain, and the IBEX dropped 1.43 percent to 8.669.8.

Utilities EON (FWB: EOAN) and RWE (FWB: RWE) were 3.6 percent and 2.93 percent lower respectively on the Dax, on the news that Germany wants to tax nuclear power.

Markets in the Asia-Pacific region were mixed, although most gained after US Federal Reserve Chairman Ben Bernanke said that the US economy is recovering at a moderate pace, and that the Fed will begin to raise interest rates before the US economy reaches “full employment”, although he didn’t say when that would be.

The Nikkei 225 added 0.18 percent to 9.537.94 in Tokyo and the Mothers market was 1.74 percent higher to 416.49, but the Topix index fell 0.1 percent to 858.33.

Nissan Motor (TYO: 7201) was up 1 percent after it said it has 6,000 advance orders in Japan for the Leaf, its new electric car, while Softbank (TYO: 9984), which sells Apple’s (NAS: AAPL) iPhone in Japan, added 2.3 percent after a new model was introduced in the US Monday.

JFE Holdings (TYO: 5411) fell 1 percent and Nippon Steel (TYO: 5401) dropped 1.3 percent after BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO) each said their prices for iron ore will be 23 percent higher during the July through September quarter than they have been in the April through June quarter.

Other gainers in the region included the Shanghai Composite, which added 0.09 percent to 2,513.95 while the Hang Seng was up 0.56 percent to 19,487.48 in Hong Kong and South Korea’s Kospi gained 0.82 percent to 1,651.48.

In Australia, the Sydney Ordinaries added 1.16 percent to 4,401.2 and the S&P/ASX200 was 1.28 percent higher to 4,381.2 as BHP Billiton was up 1.3 percent and Rio Tinto gained 1.8 percent on their new pricing announcement for iron ore.

On the other hand, Taiwan’s Taiex was down 0.08 percent to 7,151.99, the Straits Times Index fell 0.19 percent to 2,746.61 in Singapore and India’s Sensex dropped 0.98 percent to 16,617.1.

New York markets were mixed in midday trade, with the Dow Jones Industrial Average up 0.67 percent to 9,882.62 and the S&P 500 adding 0.44 percent to 1,055.1, but the Nasdaq Composite had dropped 0.55 percent to 2,161.91.

Crude oil prices were slightly higher and metals were up, with gold trading in record territory at close to $1,250 per troy ounce.

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