Foot­sie left to sing the blues

Daily Mail - - City & Finance -

ED­DIE Cochran got it right when he said there ‘ain’t no cure for the sum­mer­time blues’. In the City the words of the 1950s rocker had a cer­tain res­o­nance as de­spon­dent deal­ers watched the Foot­sie trade be­low 5,000 for a time. It was dragged down yet again by a fur­ther hefty fall in oil gi­ant BP. Its shares got be­low £4 on con­tin­u­ing con­cern about the on­go­ing oil spill dis­as­ter in the Gulf of Mex­ico be­fore mak­ing a luke­warm re­cov­ery.

And the bad news didn’t stop there. Fitch, the credit rat­ing agency, stuck its big oar in and hit sen­ti­ment with a warn­ing that the UK faced a ‘for­mi­da­ble’ chal­lenge to bring down its huge bud­get deficit. The new coali­tion govern­ment must be more am­bi­tious in slash­ing the deficit as the UK had the fastest ris­ing debt ra­tios of any of the higher rated economies and is hang­ing on to its AAA credit rat­ing by the skin of its teeth.

Fitch’s com­ments saw the Foot­sie drop to 4984.66 be­fore clos­ing 40.91 points lower at 5,028.15, while the FTSE 250 shed 121 points to 9,356. Wall Street edged higher ini­tially af­ter Fed­eral Re­serve boss Ben Ber­nanke said the US econ­omy ap­peared to have enough mo­men­tum to avoid a dou­ble-dip re­ces­sion.

Yet more sabre-rat­tling by Pres­i­dent Obama, who had the temer­ity to say that he would sack chief ex­ec­u­tive Tony Hay­ward if he could, and ru­mours that he could soon call for all of BP’s li­cences in the US to be sus­pended, sparked an­other big sell-off. The shares skid­ded to a two-year low of 396.8p be­fore ral­ly­ing to fin­ish 21.4p or 5pc off at 408.95p.

Banks took an­other past­ing amid fears that stricter reg­u­la­tions and a new tax levy would se­verely dent prof­its. Lloyds Bank­ing Group, 42pc-owned by the UK tax­payer, lost 2.2p

by Geoff Fos­ter more to 51.78p, while the 83pc-owned Royal Bank of Scot­land cheap­ened 1.64p to 41.43p. Bar­clays lost a fur­ther 9.35p to 276.6p.

Star­ing rel­e­ga­tion from the Foot­sie in the face, travel group Thomas Cook lost 5.8p to 190.7p and the London Stock Ex­change dipped 13p to 598.5p.

Min­ers bucked the trend with the world’s largest pri­mary sil­ver pro­ducer Fres­nillo up 41.5p at 939.5p. Deal­ers con­tin­ued to hear gos­sip that Car­los Slim, the Mex­i­can tele­coms and ce­ment ty­coon and the world’s rich­est in­di­vid­ual and worth around £35bn, is in­ter­est­ing in bid­ding for the group at around £8bn or £12 a share.

Re­flect­ing the record gold price of $1251.05 an ounce, Rand­gold Re­sources jumped 135p to 6095p and BHP Bil­li­ton 33p to 1768.5p.

In an­tic­i­pa­tion of its in­clu­sion into the FTSE All Share in­dex, gold pro­ducer Cen­tamin Egypt ad­vanced 7p to a record 165p. It also an­nounced a bet­ter-than-ex­pected in­crease in re­source es­ti­mates for its flag­ship Sukari project. To­tal re­sources at the end of June 1 rose to 14.5m ounces and since March 2008, the com­pany has grown the re­source at 115,000 ounces per month.

Falk­land Is­land go-go stock Rock­hop­per Ex­plo­ration gushed to 310p and closed 5.75p to 295.5p fol­low­ing news of a suc­cess­ful £48.5m share plac­ing at 280p a share, mas­ter­minded by bro­ker Canac­cord. Cash raised will cover the planned flow-test on Sea Lion prospect and work­ing cap­i­tal.

It fol­lows the £50m raised by Canac­cord last Oc­to­ber and bro­ker Evo­lu­tion says that the new amount raised will not be enough to cover fur­ther ap­praisal wells on Sea Lion. It ex­pects fur­ther fundrais­ing later in the year but re­mains bullish.

Other Falk­land stocks were sold as some in­vestors raised cash for new Rock­hop­per stock. De­sire Petroleum slumped 12.75p to 92.25p and Bor­ders & South­ern 2.25p to 67.5p.

Manch­ester-based man­u­fac­turer of in­dus­trial chains Renold de­clined 2.25p to 25.5p fol­low­ing news fi­nance di­rec­tor Peter Bream is leav­ing the com­pany. Full-year re­sults were in line with ex­pec­ta­tions and an­a­lysts be­lieve there are good re­cov­ery prospects.

Gooch & Housego, the spe­cial­ist man­u­fac­turer of op­ti­cal com­po­nents, jumped 22.5p to 203.5p on bet­ter-than-ex­pected in­terim re­sults. In­vestec up­graded its full year earn­ings per share es­ti­mates for this year and next by 24pc and 27pc re­spec­tively.

A bullish trad­ing update lifted Ti­tan Europe 2p to 33.75p. The maker of wheels for min­ing, con­struc­tion and agri­cul­tural ve­hi­cles, said it ex­pects 2010 trad­ing to beat mar­ket ex­pec­ta­tions.

Await­ing fur­ther news of the takeover ‘ap­proaches’, sup­port ser­vices com­pany Scott Wil­son eased 0.75p to 114.75p. US com­pa­nies AECOM and URS was men­tioned as pos­si­ble bid­ders by Pan­mure Gor­don. The bro­ker’s tar­get price is 127p.

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