FTSE 100 down 0.2% as commodities fall, Dow Jones, S&P 500 and NASDAQ seen lower

Overview: the FTSE 100 extended losses today, shedding 0.2% after inching 0.1% lower on Monday. The blue chip index started the day with gains, but later turned negative after a survey showed a decline in business sentiment in Germany to pressure European stock markets and send commodity prices down to weaken the mining and energy sectors.
Plumbing and heating equipment manufacturer Wolseley (LSE: WOS) rallied 11% to emerge atop the leaderboard after saying that its full year profits will exceed the projected £326 million if current trends continue due to better than expected cost efficiencies.
Quality and safety services provider Intertek (LSE: ITRK) was a distant second with a 4.5% advance.
Other notable risers included pharmaceutical companies Shire (LSE: SHP) and AstraZeneca (LSE: AZN), which climbed 1.7% and 1% and commercial property stocks Liberty International (LSE: LII) and Hammerson (LSE: HMSO), which gained 1.5% and 1% respectively.
Interdealer broker ICAP (LSE: IAP) was the heaviest faller in the index with a 3% loss. Retailer Next (LSE: NXT) and hedge fund manager Man Group (LSE: EMG) shed almost 2%.
In the US, futures for the main stock indexes declined in pre-trade to signal a lower open on Wall Street. The Dow Jones Industrial Average is projected to shed 0.2%, while futures for the broader S&P 500 index are down marginally and the technology heavy NASDAQ composite is seen 10 points lower.
Commodities
Crude oil futures slipped below US$80/barrel today after rallying on concerns over the ongoing strikes at six of Total’s (NYSE: TOT) French refineries and Iran’s nuclear program early in the week.
More positive news came yesterday, when China reported that it has processed 29% more crude in the month of January than a year before, signalling an increase in demand from the world’s second largest energy consumer.
However, oil found itself under pressure on Tuesday after an update from Germany showed a decline in the Ifo index from 95.8 to 95.2 in January instead of an expected increase to 96.4, reflecting a lower level of business confidence in the country to push down European stock markets.
Crude declined further when Total met with a workers’ union, expecting to settle the dispute and end the strikes.
April Brent Crude declined to US$77.36/barrel, while US light, sweet crude moved down to US$79.24/barrel.
The American Petroleum Institute (API) is set to release its inventories report today with Reuters projecting an increase of 1.9 million barrels, signalling lower crude demand in the US.
Blue chip oil and gas producers were in decline today. Cairn Energy (LSE: CNE) and Tullow Oil (LSE: TLW) led the retreat with losses of nearly 2%. BG Group (LSE: BG) declined marginally, BP (LSE: BP) lost nearly 1%, while fellow supermajor Shell (LSE: RDSB) was flat.
Petrofac (SLE: PFC) also lost almost 1%, while fellow oil and gas engineering firm Amec (LSE: AMEC) was unmoved.
Midcaps were mixed. Melrose Resources (LSE: MRS) was at the bottom of the pile with a 3.5% loss. Heritage Oil (LSE: HOIL) was down 1.3%, while Premier Oil (LSE: PMO) shed nearly 1% and Soco International (LSE: SIA) declined marginally.
Dragon Oil (LSE: DGO) outperformed the sector with a 1% gain after announcing its full year results and reporting a cash balance of over US$1 billion. Dana Petroleum (LSE: DNX), Salamander Energy (LSE: SMDR) and JKX Oil & Gas (LSE: JKX) also were in the black, adding less than 1%.
Services companies Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) made little headway.
North American based explorer Nighthawk Energy (AIM: HAWK) slipped 15% after updating the market on its progress at the Jolly Ranch project in Colorado.
EU operating Rome-based oil junior Mediterranean Oil & Gas (AIM: MOG) lost 3%, while Mongolia-focused Petro Matad Ltd (AIM: MATD) added 3.5%.
Gold, silver and platinum fall on stronger US dollar
Gold eased in the afternoon following a strong start when the yellow metal reached US$1,120/oz, boosted by a weaker US dollar. The American currency fell against a basket of six currencies ahead of Fed Chairman Ben Bernanke’s speech to the US Congress, which is scheduled for tomorrow. Last week, the Federal Reserve hiked the discount rate, which it charges banks for emergency loans, by 25 basis points to 0.75% to propel speculation that the anticipated tightening of monetary policy could come sooner than expected.
The Fed has since played down the increase and Bernanke is expected to reaffirm this stance tomorrow and voice the Fed’s intention to keep the interest rates at near zero.
However, the euro slipped against the US dollar later in the day after a bearish update from Germany, where the Ifo sentiment index declined to 95.2 from 95.8 in January, while an increase to 96.4 was expected.
Gold, which is seen as a riskier investment alternative and moves inversely to the US dollar, slid to US$1,105/oz.
Other precious metals also declined as silver and platinum dropped to US$16.08/oz and US$1,521/oz respectively.
Last week, the World Gold Council, said that gold demand remained above US$100 billion for the second year in a row in 2009, while falling 11% in tonnage terms. The decline in tonnage masked a progressive recovery in jewellery and industrial demand and resilient investment demand amid uncertainty in global financial and commodity markets, said the Council.
Most mining stocks were in decline today. Silver miner Fresnillo (LSE: FRES) was at the bottom of the sector in the FTSE 100 with a loss of nearly 2%. Platinum miner Lonmin (LSE: LMI) and gold producer Randgold Resources (LSE: RRS) both shed 1%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) went against the tide, posting a small gain.
Midcaps also declined. Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) lost more than 2.5%, while gold producer Petropavlovsk (LSE: POG) was down 2%.
Turkey and Saudi Arabia operating gold explorer KEFI Minerals (AIM: KEF) and London listed Australian gold producer Leyshon Resources (AIM: LRL) led the juniors with gains of 7.5% and 5.5% respectively. Turkey focused gold miner Ariana Resources (AIM: AAU) and UK-registered China operating copper and gold miner Central China Goldfields (AIM: GGG) both added 4%.
Uzbekistan focused gold miner Oxus Gold (AIM: OXS) and Africa focused gold deposit developer Cluff Gold (AIM: CLF) were in decline, shedding 6% and 4% respectively.
Base metals decline to weaken miners
Base metals also were in decline today. Copper fell to US$3.29/lb, while nickel declined to US$9.20/lb. Zinc retreated to US$1.00/lb.
Mining stocks fell today with the sole exception of the world’s largest miner BHP Billiton (LSE: BLT), which defied the trend with a small gain. Vedanta Resources (LSE: VED) was the biggest faller with a loss of nearly 2%. Eurasian Natural Resources (LSE: ENRC) and Xstrata (LSE: XTA) dropped 1.4% and 1% respectively, while Anglo American (LSE: AAL), Antofagasta (LSE: ANTO), Kazakhmys (LSE: KAZ) and Rio Tinto (LSE: RIO) posted small losses.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) was in correction after last week’s rally, shedding 5%.
Tantalum concentrate supplier with assets in Mozambique Noventa (AIM: NVTA) and Tunisia focused metal miner Maghreb Minerals (AIM: MMS) led the juniors, climbing 8% and 7% respectively. Iron ore focused investor Red Rock Resources (AIM: RRR) and Forte Energy (AIM: FTE) followed with gains of 4.5%.
Russia focused copper and nickel miner Amur Minerals (AIM: AMC) headed in the opposite direction, slipping 9%.
Banks, insurance, private equity
Financial stocks were mixed. Part-nationalised banks Lloyds (LSE: LLOY) and Royal Bank of Scotland (LSE: RBS) gained 1% and 1.2% respectively. HSBC (LSE: HSBA) added less than 1%, while sector peers Barclays (LSE: BARC) and Standard Chartered (LSE: STAN) declined, shedding 1.3% and 0.5% respectively.
Insurance companies showed little movement. Admiral Group (LSE: ADM) and Legal & General (LSE: LGEN) posted insignificant gains, while peers Aviva (LSE: AV), Old Mutual (LSE: OML), Prudential (LSE: PRU), RSA Insurance Group (LSE: RSA) and Standard Life (LSE: SL) were sitting just below the opening level.
Private equity group 3i (LSE: III) lost 1%.
Large and Mid Cap News
Plumbing products and building materials supplier Wolseley PLC (LSE: WOS) said that, if current trends continue, it expects group trading profit before exceptional items to exceed the current analysts' consensus forecast of £326 million for the financial year to 31 July 2010.
Lloyds Banking Group (LSE: LLOY) chief executive Eric Daniels has waived his annual bonus for the second consecutive year, and he said Lloyds' performance is in danger of being obscured by the current debate on executive bonus awards in the banking sector.
Rio Tinto (LSE, ASX: RIO) announced it is expanding the Mine of the Future programme to develop new equipment and systems for deep underground mines. The group has selected three partners to work on the project; Aker Wirth and Atlas Copco will individually work with Rio Tinto to develop two new tunneling concepts and Herrenknecht will work on the development of a new shaft boring machine.
AstraZeneca (LSE: AZN) has settled a long-running transfer pricing dispute with HM Revenue & Customs (HMRC) in the UK. The settlement of the claims, spanning a 15-year period between 1996 to the end of 2010, will cost the drug-maker £505m.
Oil and gas producer and FTSE 250 constituent Dragon Oil (LSE: DGO) reported an average daily production rate increase of 9% in 2009 over 2008 and landmark production of 50,000 bopd (barrels of oil per day) achieved at the turn of 2009/2010. It is also offering a bullish outlook for the next three years amid a recovery in commodity prices and with a cash balance of more than US$1.1 billion.
Small Cap News
Central China Goldfields PLC (AIM: GGG) said it was notified by several of its directors that they bought a total 880,446 ordinary shares in the company at a price of 3.077-3.15 pence a share.
Forte Energy NL (AIM, ASX: FTE) has reported excellent results from the first batch of laboratory assays taken from the first eight diamond core drill holes at its Bir En Nar uranium project in the Republic of Mauritania, West Africa. The high-grade assays highlighted 16 metres at 1,617 parts per million (ppm) uranium, which included 8 metres at 2,470ppm.
Nighthawk Energy (AIM: HAWK) said that the operator of its 50% owned Jolly Ranch oil project in Colorado, Running Foxes Petroleum Inc, expects production to rise from 150 bopd (barrels of oil per day) to an initial target of 1,000 bopd during 2010.
Accsys Technologies (AIM: AXS) has entered a distribution agreement with Enno Roggemann GmbH & Co to sell and distribute its Accoya wood into Germany and Poland, expecting sales of 40,000 cubic metres over the next five years.
African Diamonds (AIM: AFD) has received the latest valuation of diamonds from its AK6 mine in Botswana, and at US$162 a carat, the valuation exceeds the company’s previous projections. The valuation is US$23 per carat higher than prices used in the current AK6 development studies. The new valuation also indicates the possibility of a US$200 per carat value at production, African Diamonds said.

In its half-yearly report for the six months ended 31 December 2009, Goldplat (AIM: GDP) said it is realising its strategy of becoming a mid-tier gold producer as its Kilimapesa mining operation advances in Kenya towards commercial production. The company’s South African and Ghanaian gold recovery plants are performing well, generating healthy revenues, Goldplat said.

China Eastsea Business Software (AIM: CESG) plans to delist from the AIM market of the London Stock Exchange, seeking shareholder approval to cancel admission and purchase ordinary shares by way of tender offer of 10 pence per share, compared to the stock’s current price of 6.50 pence.
United Business Media (LSE: UBM) has acquired privately-owned Game Advertising Online (GAO) for an initial US$1m in cash plus up to a further US$7m in performance-related payments.
North River Resources PLC (AIM: NRRP) said it has changed its accounting reference date to December 31 from June 30 and the next audited annual financial statements to be published will be for the 18 months to December 31 2010.

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