FTSE 100 rises on positive UK manufacturing and US income and spending data

Overview: the FTSE 100 bounced back from a negative start, led by utility companies and financial stocks, which were in recovery mode following last week’s falls. The market was supported by today’s update from the Chartered Institute of Purchasing and Supply’s PMI manufacturing index, which rose to the highest level since 1994 in January, climbing to 56.7 to reflect a higher manufacturing activity in the UK. The Footsie stood 0.7% above the opening level by late afternoon.
Utility stocks Severn Trent (LSE: SVT) and United Utilities (LSE: UU) made their way to the top of the leaderboard, advancing 4.5% and 3.3% respectively on reports of a possible £1.7 billion bid for fellow water company Northumbrian Water (LSE: NWG) by a Canadian pension fund. Other notable risers included British Airways (LSE: BAY), which tacked on nearly 3% after Goldman Sachs the merger between the airline and Iberia was likely to happen ahead of schedule, also upping its target price for the stock. National Grid (LSE: NG), Centrica (LSE: CNA) and Home Retail Group (LSE: HOME) also did well, adding about 2%.
Just three FTSE 100 constituents lost more than 1% today. Asset management firm Schroders (LSE: SDR) declined 2.4%, while oil and gas engineering firm Amec (LSE: AMEC) and credit information group Experian (LSE: EXPN) added slightly more than 1%.
The US stock market was off to a positive start after the Commerce Department reported a 0.4% increase in personal income in December, which was higher than personal spending for the month, which improved 0.2%. The Dow Jones Industrial Average climbed 0.6%, the broader S&P 500 index was up 0.9% and the technology heavy NASDAQ composite added 0.5%.
Commodities
Crude prices were slightly higher today after falling on yet more news from China, where the China Banking Regulatory Commission told lenders to check whether any of the loans have been used for inappropriate purposes, according to a report by Reuters. Last month, China undertook a series of measures to curb lending and prevent the economy from overheating. China remains the world’s second largest energy consumer and further tightening of the monetary policy signals lower demand for the crude for this year, which negatively impacts the prices.
Brent Crude for March delivery inched higher to US$71.85/barrel in London, while US light, sweet crude improved to US$73.15/barrel on the New York Mercantile Exchange.
Oil supermajors are set to report on their performance this week with BP (LSE: BP) and Shell (LSE: RDSB) scheduled to release their quarterly figures on Tuesday and Thursday respectively.
Major oil and gas stocks were mixed. BG Group (LSE: BG) was in decline, shedding 1.3%. Cairn Energy (LSE: CNE) declined marginally, as did BP (LSE: BP), while Shell (LSE: RDSB) remained at the opening level. Tullow Oil (LSE: TLW) was the top performer in the sector in the FTSE 100 with a gain of nearly 1%.
Amec (LSE: AMEC) slid 1.3%, while another engineering firm Petrofac (LSE: PFC) was flat.
Midcaps also showed little movement. Dana Petroleum (SLE: DNX) and Heritage Oil (LSE: HOIL) declined marginally, while JKX Oil and Gas (LSE: JKX), Premier Oil (LSE: PMO) and Soco International (LSE: SIA) were flat. Fellow FTSE 250 constituents Melrose Resources (LSE: MRS) and Salamander Energy (LSE: SMDR) posted insignificant gains.
Dragon Oil (LSE: DGO) outperformed the sector, climbing 2%.
Services companies were in decline as Wellstream Holdings (LSE: WSM) lost 1.3% and Wood Group (LSE: WG) shed less than 1%.
Juniors were little moved with the exception of US focused oil and gas junior Caza Oil & Gas (AIM: CAZA) and Peru, Colombia and Cuba operating oil and gas explorer and producer Gold Oil (LSE: GOO), which both lost 7%.
Gold, silver and platinum inch up as US Dollar slides
Gold prices improved after slipping below $1,080 after the US Dollar continued its rally, getting support from Friday’s updates on the Q4 US GDP, which rose 5.7% to beat market expectations, and the Chicago PMI (Purchasing Managers Index), which increased to 61.5 from 58.7 in December, signalling higher industrial activity in the Midwest. The greenback eased 0.4% against the euro today, cooling off after the surge and propping up gold, which is seen as an alternative investment to the American currency. The yellow metal’s appeal as an inflation hedge increased last week after the Federal Reserve decided to leave the interest rates at near zero.
Gold improved to US$1,085/oz, while other precious metals followed with silver and platinum climbing to US$16.37/oz and US$1,520/oz respectively.
The yellow metal has been in selling mode so far this year as holdings in the largest gold back exchange fund SPDR fell 1.9% to 1,111 tonnes during the previous month compared to growth of 8.1% in January 2009.
Miners were mixed with silver and platinum focused stocks making gains, while gold producers retreated.
In the FTSE 100, gold miner Randgold Resources (LSE: RRS) shed less than 1%, while silver and gold miner Fresnillo (LSE: FRES) added 1% and platinum producer Lonmin (LSE: LMI) posted a small gain.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) was flat.
Midcaps fell into the same pattern with gold producer Petropavlovsk (LSE: POG) posting a marginal loss, while Aquarius Platinum (LSE: AQP) and silver producer Hochschild Mining (LSE: HOC) gained less than 1%.
Junior miners mostly declined.
Diamond miner with assets in Sierra Leone and Guinea West African Diamonds (AIM: WAD) led the retreat with a 12% loss, while Africa operating gold miner GMA Resources (AIM: GMA) and Africa focused gold deposit developer Cluff Gold (AIM: CLF) followed, sliding 8% and 7% respectively. Western Australia operating Norseman Gold (AIM: NGL) was down 5% and Tajikistan operating gold miner Kryso Resources (AIM: KYS), Philippines focused gold producer Medusa Mining (AIM&ASX: MML) and Philippines focused Metals Exploration (AIM: MTL) all lost 4%.
Zambia focused emerald miner Gemfields (AIM: GEM) went against the tide with a 5% advance, while Australian gold and copper prospector Solomon Gold (AIM: SOLG) added 3.5%.
Large and Mid Cap News
Engineering group AMEC PLC (LSE: AMEC) that it has been selected by Brazilian company QUIP to perform basic engineering services for the topsides of the P-63 floating production, storage and offloading (FPSO) vessel, to be operated on behalf of Petrobras, Brazil's national oil company.
Small Cap News
Telit Communications PLC (AIM: TCM) said it has entered a strategic collaboration agreement with German fixed telephony provider Deutsche Telekom AG and its mobile telephony unit T-Mobile GmbH which will see the three groups work together globally in the machine-to-machine (M2M) communication sector.
Forte Energy (AIM&ASX: FTE) today reported on its activities during the quarter to end-December 2009, which were focused on exploration at its permits at Bir En Nar and near Bir Moghrein in the Zednes region of northern Mauritania.
Nyota Minerals (AIM: NYO) said results of the Tulu Kapi gold project's pre-scoping study indicates that the project is economically viable, concluding that open pit mining would be most likely and Nyota’s ‘Big Pit’ scenario looks feasible. Nyota added that evidence to date points to the existence of a much larger goldfield within the greater licence area and 2010’s drilling may potentially improve Tulu Kapi’s attractiveness even further.
China Medical System Holdings (AIM: CMSH) has signed an exclusive license agreement with privately owned French biopharmaceutical group Biocodex for the sale of Bioflor in China. The agreement secures the exclusive rights to sell the probiotic anti-diarrheal product for five years.
African Consolidated Resources (AIM: AFCR) has initiated an aggressive resource development plan, funded by November’s US$16m capital raising. The company has contracted Zimbabwean drilling companies to undertake an extensive drilling programme totalling over 38,000m.
EMED Mining (AIM: EMED) said that 2010 promises to be a transformative year for the mine development company as it progresses towards the re-commencement of copper production at the Rio Tinto mine in Spain and gold development at Biely Vrch in Slovakia.
Mobile email and data synchronisation provider Synchronica (AIM: SYNC) finished 2009 strongly with several deals completed during December. In a trading update for the 12 months ended 31 December 2009, the company revealed it had won new contacts with eight mobile operators in its targeted developing markets. As a result Synchronica’s ‘Mobile Gateway’ push email product was added a total of thirteen operators in the year.
Cinpart (AIM: CINP) said its 72.2 percent held subsidiary Active Energy has signed a Memorandum of Understanding (MoU) with Scottish and Southern Energy (LSE: SSE) in relation to its VoltageMaster product.

Daniel Stewart & Company published a note on Planet Payment (AIM: PPT) after the multi-currency processing solutions provider announced an agreement with UAE-based Network International to provide it with its proprietary Dynamic Currency Conversion (DCC) services branded as Pay in Your Currency, which the broker said was a standout deal supporting its revenue forecasts for 2010.
London based stockbroker Fox-Davies Capital has reiterated its 'buy' recommendation for Discovery Metals (AIM: DME) following the company’s update on the quarter ended 31 December 2009. The broker said it has always been positive about the depth potential at Discovery’s Boseto copper project in Botswana and it is pleased to see that the 5 holes drilled to date all intercepted mineralisation.
Prosperity Minerals Holdings (AIM: PMHL) today disclosed information relating to the sale of its Chinese cement business Upper Value Investments Limited, including its property valuation and half yearly results for the PMHL remaining group which stands at approximately US$155 million.
Baobab Resources (AIM: BAO) said two of three diamond drill holes completed prior to the close of the 2009 field season at the South Zone prospect of the Tete magnetite-ilmenite project in Mozambique intersected broad zones of cumulate-style mineralisation similar to that of the 47.7 Mt (million tonnes) inferred resource at Chitongue Grande and massive magnetite-ilmenite intrusive dykes.
Kalahari Minerals (AIM: KAH) said that the redistribution of its stake in Extract Resources (ASX&TSX: EXT) to its shareholders would be value destructive and turn off its major institutional investors after the move was proposed by Niger Uranium (LSE: URU) shareholder NWT Uranium Corp (TSX-V: NWT).  http://www.proactiveinvestors.co.uk/companies/news/12834/ftse-100-rises-on-positive-uk-manufacturing-and-us-income-and-spending-data-12834.html