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September 22, 2010    

Antofagasta leads miners higher as London markets decline

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by Elaine Frei
Antofagasta leads miners higher as London markets decline

European equities markets were lower Wednesday on concerns that central banks will have to extend more stimulus measures in order to promote recovery from the recession after the US Federal Reserve yesterday said that it stands ready to act if necessary and on today’s release of the minutes of the latest meeting of the Bank of England’s monetary policy committee, which indicated that it is also considering the possibility of making more stimulus moves.

The FTSE 100 was 0.44 percent lower to 5,551.91 in London, while the FTSE 250 dropped 0.92 percent to 10,448.33 on the concerns about the need for more stimulus and after the Confederation of British Industry predicted that the UK economy will grow 2 percent next year, below its previous forecast of 2.5 percent growth.

Despite declines, the mining sector saw gains as metals prices rebounded on a weaker US dollar, with miners taking the top five spots on the FTSE 100’s list of gainers.

Antofagasta (LSE: ANTO) added 3.14 percent to lead gains both on the index and in its sector, while Kazakhmys (LSE: KAZ) was up 2.86 percent, Randgold Resources (LSE: RRS) added 2.77 percent, Xstrata (LSE: XTA) was up 2.66 percent on the news that it has negotiated a new loan agreement, and African Barrick Gold (LSE: ABG) gained 2.47 percent.

Not all miners saw gains, however, as Ireland-based Kenmare Resources (LSE: KMR) dropped 5 percent to lead three decliners lower.

Waste management specialist Shanks Group (LSE: SKS) added 6.09 percent to lead gains on the 250, on rumors of a possible bid from private equity firm Carlyle Group, but Shanks had no comment on any potential deal.

Insurer Aviva (LSE: AV) led declines in its sector and on the 100 as it dropped 4.8 percent, while collagen products manufacturer and distributor Devro (LSE: DVO) dropped 5.75 percent for the worst performance on the 250.

Banks were lower on the concerns about the possible need for more stimulus measures, with Royal Bank of Scotland (LSE: RBS) leading declines among London banks as it dropped 2.22 percent, while HSBC Holdings (LSE: HSBA) was down 1.04 percent on rumors of a dispute between the bank’s CEO and its board of directors.

In Spain, meanwhile, Banco Santander (BMAD: SAN) dropped 2.9 percent after Credit Suisse cut its recommendation on the bank from “outperform” to “neutral”.

The FTSE Eurofirst 300 was down 1.38 percent to 1,067.53 while the Dax fell 1.08 percent to 6,208.33, the CAC-40 was 1.3 percent lower to 3,735.05 and the IBEX dropped 1.93 percent to 10,555.2.

Markets in the Asia-Pacific region were mixed as several nations took time off to celebrate autumnal and harvest festivals.

The Nikkei 225 was 0.37 percent lower to 9,566.32 in Tokyo, while the Topix index fell 0.4 percent to 846.52 and the Mothers market dropped 0.49 percent to 372.97 as the yen strengthened again and Japan’s prime minister warned that his government will intervene in the currency again if necessary.

Some exporters declined on the drop in the yen, including a 1 percent drop for Toyota Motor (TYO: 7203), while Honda Motor (TYO: 7267) fell 1.6 percent and camera and copier maker Canon (TYO: 7751) was down 1.2 percent.

However, consumer electronics group Panasonic Corp (TYO: 6752) was up 2.4 percent on reports that it will not sell new shares to raise cash for a planned buyout of Sanyo Electric (TYO: 6764) and Panasonic Electric Works (TYO: 6991), while Sharp (TYO: 6753) gained 1.3 percent on plans to expand into the solar power industry.

Continuing diplomatic troubles between Japan and China sent companies with ties to China lower, with Hitachi Construction Machinery (TYO: 6305) falling 2.1 percent while Komatsu (TYO: 6301) dropped 2.5 percent.

Japanese property developers saw gains on new data showing that the average price for land in the nation dropped just 3.7 percent in the fiscal year which ended in June, a slower decline than the 4.4 percent drop in the previous fiscal year.

Mitsui Fudosan (TYO: 8801) and Sumitomo Realty and Development (TYO: 8830) each added 1.7 percent, while Nomura Real Estate Holdings Inc (TYO; 3231) gained 3.2 percent.

Aside from the declines in Japan, India’s Sensex was down 0.3 percent to 19,941.72.

Markets seeing gains included the Straits Times Index, which added 0.02 percent to 3.096.1, while in Australia the S&P/ASX200 was up 0.17 percent to 4,625.2 and the Sydney Ordinaries gained 0.21 percent to 4,674.7, and Hong Kong’s Hang Seng also added 0.21 percent, to 22,047.71.

Holidays kept markets closed in China, Taiwan and South Korea.

Markets were lower in New York in midday trade, with the Dow Jones Industrial Average down 0.33 percent to 10,726.03 while the S&P 500 had dropped 0.52 percent to 1,133.85 and the Nasdaq Composite was 0.9 percent lower to 2,328.2.

Crude oil prices were lower at midday, but metals prices were higher as December contracts for gold traded $17.20 higher in New York to $1,291.50 per troy ounce after going as high as $1,294.50 earlier in the session.

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