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June 21, 2010    

Miners Vedanta Resoruces, Ferrexpo lead 100, 250 in London

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by Elaine Frei
Miners Vedanta Resources, Ferrexpo lead 100, 250 in London

Equities markets were higher in Europe after this weekend’s announcement from China that it will allow its currency to appreciate rather than keeping it at a fixed rate in relation to the US dollar, with metals-related shares especially benefiting from the news as investors hoped that a stronger currency in China will boost demand for metals there.

The FTSE 100 added 0.92 percent to 5,299.11 in London, while the FTSE 250 gained 0.45 percent to 9,997.81.

Miners led gainers on both the 100 and 250, with all five top gainers on the 100 from the sector.

Iron-ore miner Ferrexpo (LSE: FXPO) was the biggest gainer of the day in London as it added 7.06 percent on the 250, while Vedanta Resources (LSE: VED) topped the 100 as it gained 6.01 percent, followed by a gain of 4.96 percent for Rio Tinto (LSE: RIO) while Antofagasta (LSE: ANTO) was up 4.84 percent, Xstrata (LSE: XTA) was 4.77 percent higher and BHP Billiton (LSE: BLT) gained 4.72 percent.

The energy sector was mostly higher on the news about China’s currency, but BP (LSE: BP) dropped 2.22 percent on media reports that it is attempting to raise $50 billion to pay for its oil spill in the Gulf of Mexico, including a bond sale worth $10 billion, selling assets worth $20 billion and taking out a loan, also worth $20 billion.

The only other decliner in the energy sector was oil well construction group Hunting (LSE: HTG), which was down 1.1 percent, while Lamprell (LSE: LMP) led gainers in the sector as it added 5.98 percent.

London’s retail sector was mostly lower, with clothing retailer Marks & Spencer Group (LSE: MKS) down 2.53 percent to lead declines on the 100 and sports fashion retailer J. D. Sports Fashion (LSE: JD) turned in the worst performance in the sector as it dropped 6.3 percent, but automobile retailer Inchcape (LSE: INCH) was up 3.28 percent to lead gains in the sector.

Daejan Holdings (LSE: (DJAN) had the biggest decline in the real estate sector, on the 250 and in London as it dropped 6.61 percent on the session, while self-storage provider Big Yellow Group (LSE: BYG) led the sector as it added 2.35 percen.

The FTSE Eurofirst 100 was up 0.95 percent to 1,054.46 while the IBEX added 1 percent to 10,071.9, the Dax was 1.22 percent higher to 6,292.97 and the CAC-40 gained 1.33 percent to 3,736.15.

Asia markets were up on the currency announcement from China over the weekend.

The revaluation will be gradual, according to reports, rather than coming in a one-time adjustment of the currency’s value, and the central bank will not abandon its current 0.5 percent daily trading band versus the greenback.

The Nikkei 225 was 2.43 percent higher to 10,238.02 in Tokyo, its highest close in a month, while the Topix index added 2.02 percent to 902.49 and the Mothers market gained 1.92 percent to 416.57.

Heavy machinery manufacturers that do business with China were higher, with Komatsu (TYO: 6301) up 4.6 percent while Hitachi Heavy Machinery (TYO: 6305), which receives 31 percent of its revenues from China, gained 6.7 percent.

Traders saw gains as the price of metals advanced, with Mitsui & Co (TYO: 8031) gaining 5.9 percent while Mitsubishi Corp (TYO: 8058) was 6.6 percent higher.

Australia’s markets were up as the Sydney Ordinaries added 1.28 percent to 4,632.7 and the S&P/ASX200 was up 1.33 percent to 4,612.6, while South Korea’s Kospi was 1.62 percent higher to 1,739.68, the Sensex gained 1.74 percent to 17,876.55 in India, the Straits Times Index was up 1.84 percent to 2,885.64 in Shanghai, and Taiwan’s Taiex added 1.9 percent to 7,635.56.

The Shanghai Composite was up 2.9 percent to 2,586.21 and Hong Kong’s Hang Seng was 3.8 percent higher to 20,912.18, lifted by gains for shares of Chinese companies and companies doing business China on the news of China’s policy change for its currency.

In the real estate sector, China Resources Land Ltd (SEHK: 1109) was up 4.4 percent while Sino Land Co (SEHK: 0083) added 5.6 percent and Hang Lung Properties (SEHK: 0101), which got 40 percent of its sales in China last year, gained 6 percent.

China Southern Airlines (SEHK: 1055) added 6.5 percent while China Eastern Airlines (SEHK: 0670) gained 6.9 percent.

Wall Street saw gains on the news about China’s currency, but indices retreated from earlier highs as some retailer declined as investors faced the reality tat a stronger yuan would make imports from China more expensive.

At just before 1 p.m. in New York the Dow Jones Industrial Average was up 0.52 percent to 10,504.68 wile the S&P 500 had added 0.36 percent to 1,121.48 and the Nasdaq composite was 0.1 percent higher to 2,312.18.

Prices for West Texas Intermediate crude oil were up slightly, trading above $77 per barrel, while metals were mixed as gold and silver prices had dropped even as gold traded at around $1,250 per troy ounce, but copper prices were higher.

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