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Friday 11th of February 2011
February 8, 2011    

Premier Oil leads declines in energy sector

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by Elaine Frei
Premier Oil leads declines in energy sector

European equities markets were mostly higher Tuesday, but the pan-European FTSE Eurofirst 300, which monitors the 300 largest European companies as determined by market capitalization, dropped 0.17 percent to 1,174.70 on the session.

The FTSE 100 was up 0.67 percent to 6,091.33 in London, while the FTSE 250 was 0.16 percent higher to 11,830.5.

Despite general gains, the energy sector was mostly lower on the session, led by a 6.82 percent decline for oil and gas explorer Premier Oil (LSE: PMO) after a well in the North Sea did not discover as much oil and gas as had been expected.

Other decliners in the energy sector included Soco International LSE: SIA), which was 4.08 percent lower, while Cairn Energy (LSE: CNE) fell 2.39 percent, Petrofac Ltd (LSE: PFC) dropped 2.13 percent and AMEC (SLE: AMEC) was 1.47 percent lower.

There were six gainers in the sector, led by BG Group (LSE: BG), which added 2.08 percent.

Premier Oil was the worst performer on the 250, while chipmaker ARM Holdings (LSE: ARM) fell 2.62 percent to lead declines on the 100 after a reduced recommendation, down from “overweight” to “equal weight”, from Barclays.

Automotive and aerospace engineering group GKN (LSE: GKN) was up 5.57 percent to lead gains on the 100, while transport logistics speicalist Stobart Group Ltd (LSE: STOB) gained 7.28 percent as the best performer on the 250.

The retail sector was mostly higher, with gains led by automobile retailer Inchcape (LSE: INCH), which added 6.37 percent, while Marks & Spencer (LSE: MKS) was up 3.75 percent, while the five decliners in the sector were led by grocery retailer Tesco (LSE: TSCO), which was down 1.52 percent.

The mining sector was mixed, with gains led by African Barrick Gold, which was up 3.37 percent.

The IBEX added 0.39 percent to 10,965.1 in Madrid, while the CAC-40 was 0.43 percent higher to 4,108.27 in Paris and the Dax gained 0.54 percent to 7,323.24 in Frankfurt.

Gains on the Dax came even though new data showed that industrial production in Germany was down in December after a decline in construction that was blamed on cold weather.

Most markets in the Asia-Pacific region were lower on the session, but Tokyo’s markets and Australian markets managed to make gains.

After the close of trade, the People’s Bank of China announced an new round in interest rate increases, including a hike to 6.06 percent in the one-year lending rate, up from 5.81 percent, while the deposit rate was raised from 2.75 percent to 3 percent.

The hike in rates, which is meant to help fight inflation, goes into effect on Wednesday.

The Nikkei 225 was up 0.41 percent to 10,636 in Tokyo, while the Topix index added 0.38 percent to 944 and the Mothers market gained 1.25 percent to 486.99, with gains coming on better earnings outlooks.

In the telecommunications sector, mobile phone service provider KDDI (TYO: 9433) was up 5.8 percent after Credit Suisse upgraded the company’s shares from “neutral” to “outperform”.

Nippon Meat Packers (TYO: 2282) added 6.6 percent after it said its net income was up by 15 percent in its first three fiscal quarters, ending 31 December, and after it lifted its full-year outlook by 7.7 percent.

Horiba Ltd (TYO; 6856), which makes precision instruments for measurement, gained 6.7 percent after raising its full-year forecast on net income by 37 percent.

The Sydney Ordinaries added 0.38 percent to 4,983.1 in Australia, while the S&P/ASX200 was up 0.45 percent to 4,890.4.

Among decliners in the region, the Straits Times Index fell 0.21 percent to 3,185.36 in Singapore, while Hong Kong’s Hang Seng was down 0.29 percent to 23,484.3, the Taiex was 0.37 percent lower to 9,111.46 in Taiwan, South Korea’s Kospi dropped 0.58 percent to 2,069.7, and the Sensex was down 1.45 percent to 17,775.7 in India.

New York markets were higher in midday trade as the Dow Jones Industrial Average added 0.37 percent to 12,206.8 while the S&P 500 was up 0.27 percent to 1,322.57 and the Nasdaq Composite was 0.16 percent higher to 2,788.53.

Crude oil prices were mixed as March contracts for West Texas Intermediate crude dropped 25 cents to $87.23 per barrel, but Brent crude was up 56 cents to $99.81 per barrel at last report from the ICE Futures Europe exchange in London.

April gold was up $19.10 to $1,367.30 per troy ounce after China raised interest rates as investors looked for safe places to protect their cash from inflation.

Silver was also higher, but copper was down by less than a cent per pound.

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