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October 19, 2010    

Gold miner Fresnillo leads FTSE 100 lower

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by Elaine Frei
Gold miner Fresnillo leads FTSE 100 lower

European equities markets were lower Tuesday after China’s central bank raised one-year interest rates by a quarter of a percentage point.

The FTSE 100 was down 0.67 percent to 5,703.89 in London, while the FTSE 250 dropped 0.45 percent to 10,826.21.

The mining sector was lower save for a 5.33 percent gain for Kenmare Resources (LSE: KMR), with sector constituents taking four of the five spots on the list of biggest decliners on the 100 as metals prices fell after China’s decision on interest rates.

Gold miner Fresnillo (LSE: FRES) was the biggest loser on the 100, falling 5.27 percent, while Xstrata (LSE: XTA) was down 4.37 percent, Vedanta Resources (LSE: VED) was 3.51 percent lower and Antofagasta (LSE: ANTO) dropped 3.42 percent.

Most of the energy sector was lower as well, with oil and gas explorer SOCO International (LSE; SIA) the worst performer with a decline of 3.33 percent, while oil rig builder and refurbisher Lamprell (LSE: LAM) leading a few gainers higher as it added 5.81 percent.

Alcoholic beverage maker Diageo (LSE: DGE) led gains on the 100, adding 2.47 percent, while Jupiter Fund Management (LSE: JUP) was the best performer on the 250 as it added 9.62 percent after the investment management group said that the assets it manages were up 12 percent in the third quarter.

Business processing outsourcer Xchanging (LSE: XCH) was the biggest loser on the 250 as it dropped 6.43 percent.

Banks were mixed as Standard Chartered (LSE: STAN) added 1.98 percent for the best performance in the sector, while Lloyds Banking Group (LSE: LLOY) had the worst day in the sector with a decline of 2.35 percent.

Homebuilder Bellway (LSE: BWY) was down 6.07 percent for the worst performance in its sector after it said sales were slower than expected in September because planned government spending cuts discouraged purchases of homes, while Persimmon (LSE: PSN) dropped 4.19 percent.

In the related real estate sector, Daejan Holdings had the worst day in a mixed sector, falling 4.59 percent.

Software group Autonomy Corporation added 1.76 percent on revenues that were higher in the third quarter, while Mothercare Plc (LSE: MTC), which caters to expectant mothers and children under the age of eight, was up 5.33 percent after UBS raised its recommendation on the retailer from “neutral” to “buy”.

The FTSE Eurofirst 300 was down 0.54 percent to 1,082.51 while the IBEX fell 0.02 percent to 10,895.3, the Dax was 0.4 percent lower to 6,490.69 and the CAC-40 dropped 0.71 percent to 3,807.17.

Markets in the Asia-Pacific region were mixed.

The Nikkei 225 added 0.43 percent to 9.539.45 in Tokyo, while the Topix index was up 0.39 percent to 833.73 and the Mothers market gained 0.4 percent to 345.93.

Banks in Tokyo gained on US-based Citigroup’s (NYSE: C) strong quarterly report, with Mitsubishi UFJ (TYO: 8306) up 1.6 percent while Sumitomo Mitsui Financial Group (TYO: 8316) added 1.7 percent and M izuho Financial Group (TYO: 8411) was 2.6 percent higher after it said it will make more credit available to clients in the region outside of Japan as demand in Japan retreats.

Sumitomo Chemical (TYO: 4005) gained 3.1 percent on a broker upgrade from “neutral” to “outperform”.

Traders dealing heavily in commodities were lower after oil prices declined, with Mitsubishi Corp (TYO: 8058) down 0.9 percent while Mitsui & Co (TYO: 8031) dropped 1 percent.

Other gainers in the region included Australia’s markets, where both the Sydney Ordinaries and the S&P/ASX200 added 0.08 percent, to 4,727.3 and 4,650.7 respectively, while Singapore’s Straits Times Index was up 0.35 percent to 3,192.29, the Hang Seng was 1.25 percent higher to 23,763.73 in Hong Kong and the Shanghai Composite gained 1.58 percent to 3,001.85 in China.

The People’s Bank of China raised one-year interest rates by a quarter of a percentage point, beginning on Wednesday, raising the one-year deposit rate to 2.5 percent while the one-year lending rate rose to 5.56 percent.

Decliners included the Taiex, which dropped 0.18 percent to 8,046.23 in Taiwan while India’s Sensex was 0.92 percent lower to 19,983.13 and the Kopsi dropped 0.97 percent to 1,857.32 in South Korea.

New York markets were lower in midday trade, with the Dow Jones Industrial Average down 1 percent to 11,032.26 while the S&P 500 dropped 0.93 percent to 1,173.66 and the Nasdaq Composite was 1.04 percent lower to 2,454.76.

Prices for crude oil were down, with November contracts for West Texas Intermediate crude down just over $2 per barrel, while metals prices were also lower as gold dropped $30.40 per troy ounce from its close Monday.

Commodities prices fell on China’s decision on interest rates, with gold falling especially after comments Monday from US Treasury Secretary Timothy Geithner promising that the US will not devalue the dollar.

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