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November 12, 2010    

Rolls-Royce sees gains in London amid wider declines

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by Elaine Frei
Rolls-Royce sees gains in London amid wider declines

European equities markets were mixed as investors worried about the effect of possible higher interest rates in China and about debt problems that could find Ireland asking for a bailout soon amid reports that the nation is in talks with the European Union to arrange financial help even as the Irish finance minister denied reports that a bailout was in the works.

The FTSE 100 was down 0.32 percent to 5,796.87 in London, while the FTSE 250 fell 0.3 percent to 10,866.5.

Rolls-Royce Group (LSE: RR), which has seen declines recently after trouble with one of its airplane engine models, one of which exploded in flight, was the best performer on the 100 as it added 4.62 percent, while outsourcer Xchanging (LSE: XCH), which was the worst performer on the 250 yesterday, turned in the best performance on that index today with a gain of 5.66 percent.

Technology group Imagination Technologies (LSE: IMG) did the worst of the 250 as it dropped 10.21 percent.

Miners were in focus again as most components of the sector were lower on concerns about what any interest rate hikes in China might have on demand for copper and other metals.

Kazakhmys (LSE: KAZ) was the worst performer on the 100, falling 3.42 percent, while other miners among the top five decliner on the 100 included Antofagasta (LSE: ANTO), which dropped 2.72 percent as Xstrata (LSE: XTA) was down 2.71 percent and Eurasian Natural Resources (LSE: ENRC) was 2.42 percent lower.

Over on the 250, iron-ore miner Ferrexpo led declines in the mining sector for the second day in a row as it dropped 4.22 percent, with Kenmare Resources (LSE: KMR) close behind as it fell 3.92 percent.

Banks were mixed in London, with Royal Bank of Scotland Group (LSE: RBS) up 2.17 percent for the best performance in the sector while Barclays Bank was the worst with a decline of 1.54 percent.

Electric components distributor Electrocomponents (LSE: ECM) added 4.8 percent after it reported that its profits more than doubled in the first half.

The FTSE Eurofirst 300 was down 0.43 percent to 1,104 and the CAC-40 dropped 0.94 percent to 3,831.12, but the Dax managed to add 0.17 percent to 6,734.61 and the IBEX gained 0.76 percent to 10,226.8.

Markets in Asia and the Pacific region were lower on concerns that China will hike interest rates as soon as this weekend in order to cool inflation, with banks falling on both the inflation worries and on speculation that the G20 nations will not recommend exemption of some Asian banks from new, ore stringent rules on capital reserves after all.

The Nikkei 225 fell 1.39 percent to 9,734.81 in Tokyo, while the Topix index was down 1.1 percent to 846.98 and the Mothers market dropped 0.29 percent to 368.96.

Among Japanese banks, Mitsubishi UFJ (TYO: 8306) and Sumitomo Mitsui Financial Group (TYO: 8316) were each 1.8 percent lower, while Mizuho Financial Group (TYO: 8411) dropped 2.3 percent on the China and G20-related concerns and after media reports that it will buy a stake in money manager BlackRock Inc (NYSE: BLK).

Elsewhere in the region, South Korea’s Kospi was down 0.08 percent to 1,913.12 while in Australia the Sydney Ordinaries dropped 0.65 percent to 4,778.8 and the S&P/ASX200 were down 0.76 percent to 4,692.7.

The Straits Times Index fell 1.26 percent to 3,252 in Singapore, Taiwan’s Taiex was down 1.43 percent to 8,316.05, the Hang Seng was 1.93 percent lower to 24,222.6 in Hong Kong and India’s Sensex was down 2.1 percent to 20,156.9.

The Shanghai Composite had its biggest one-day decline in over a year, dropping 5.16 percent to 2,985.44 on inflation data that had consumer price inflation up 4.4 percent in October over September

Industrial & Commercial Bank of China (SSE: 501398) fell 3.1 percent while China Construction Bank Corp (SSE: 601939) was down 3.8 percent and China Citic Bank Corp (SSE: 601998) was 5.8 percent lower.

Real estate developers were also lower after home prices were up 8.6 percent in October from last year in October, with Gemdale Corp (SSE: 600383) down 7 percent while Poly Real Estate Group (SSE: 600048) was 7.3 percent lower, both in Shanghai, while the Shenzhen-listed China Vanke (SZSE: 000002) dropped 7.1 percent.

New York markets were lower in midday trade, with the Dow Jones Industrial Average off 1.01 percent to 11,169.5 while at the same time the S&P 500 had dropped 1.45 percent to 1,195.99 and the Nasdaq Composite was 1.79 percent lower to 2,509.87.

The declines came even though the newest Thomson Reuters/University of Michigan consumer sentiment survey showed a gain to 69.3 from a reading of 67.7 last month, a bit more of a gain than analysts had expected.

The price of crude oil was substantially lower, with Brent crude down more than $2.50 per barrel in London while December contracts for West Texas Intermediate crude were down nearly $3 per barrel in midday trade in New York.

Metals prices were also down, with gold falling almost $40 per troy ounce, a decline of nearly 3 percent, while silver was down more than 5 percent, losing almost $1.50 per troy ounce, and copper was also down almost 3 percent, with a decline of 12 cents per pound.

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