World Bank report takes shine off precious metals

AS THE World Bank forecast that the value of precious metals would fall, so the price of gold, silver and platinum tumbled.

But while the global watchdog was downbeat about their prospects, it predicted that industrial metals would rise robustly this year.

The report said strong demand and tight supplies would drive industrial commodities up to their first annual increase in six years. The bank has forecast metal prices will climb 11pc this year with particular demand for lead and zinc.

It also estimated the oil price would average $55 a barrel in 2017, up from $43 a barrel last year, and rise to $60 next year.

That was a welcome boost for some of the blue-chip miners.

Antofagasta topped the FTSE 100 for the day as it reported copper production was up 13.8pc in the final quarter of the year, with 205,500 tonnes produced.

Full-year copper production was 709,400 tonnes, up 12.5pc on 2015 and the firm was upbeat for the year ahead. Russ Mould, investment director at AJ Bell, said: ‘Investors will be encouraged by Antofagasta’s belief that the industry has now passed the low point in this commodity cycle.’

The company’ shares leapt 4pc, or 33.5p, to 857.5p.

But record gold and silver production couldn’t keep Fresnillo’s shares in the black for the day.

The miner tumbled as the World Bank’s predictions sent precious metals lower.

That’s despite Fresnillo reporting record annual production of 50.3 mega-ounces of silver and 935.5 kilo-ounces of gold in the year, some 7.1pc and 22.9pc higher than 2015 respectively.

Fresnillo has forecast that those figures will rise again this year too.

But RBC expects the stock to underperform. It said: ‘We continue to remain cautious on the 12month outlook for the shares.’

Shares slipped by 4.2pc, or 62p, to 1420p.

BHP Billiton tumbled after revealing petroleum and copper production had fallen in the six months to December 31. The mining giant saw output for the commodities fall 15pc and 7pc respectively. Iron ore was up 4pc but BHP has reduced its guidance for the full year by around 2pc. Shares dipped 1.6pc, or 23p, to 1457.5p.

Rio Tinto was another faller after it offloaded its Australian subsidiary Coal & Allied Industries for just shy of £2bn.

It will also receive a further £397m from buyer Yancoal Australia in instalments over the next five years. The move is part of Rio’s strategy to exit coal. Shares were off 1.1pc, or 40p, at 3575p.

The FTSE 100 was given a lift as, across the pond, the Dow Jones finally smashed the 20000 marker. The US stock market reached a new high and took the FTSE 100 up 0.2pc, or 14.1 points, to 7164.43.

Positive talk by the new US president had its effect on a fair share of UK stocks. Equipment rental business Ashtead got a boost as Donald Trump indicated he would be sticking to his plans to increase infrastructure spending in America.

The business gets more than 80pc of its revenues from the US. Shares advanced 1.9pc, or 30p, at 1594p. Holiday booking group Hostelworld said results for the year would be in line with expectations. Overall bookings were up 2pc in the second half of the year, but down 1pc overall after a slower start to the year.

But Hostelworld said it was making good progress in its mobile business, with around 49pc of its direct sales now coming from mobile phone and tablets.

Chief executive Feargal Mooney said: ‘Set in the context of challenging market conditions, particularly Europe in the second quarter, I am pleased.’

Numis, which has a ‘Buy’ rating on the stock, said it was an encouraging update and was pleased to see the group was still planning to pay a dividend. Shares rocketed 9.6pc, or 18.5p, to 212p.