FTSE 100 tumbles on surprising US jobless claims increase, Dow Jones, S&P 500 and NASDAQ plunge 1.5%

Overview: the FTSE 100 tumbled 1.4% after US jobless claims data that came out today turned out to be worse than expected, showing an increase in benefit claims of 22,000 to 496,000, while a decline was projected by most surveys. Oil and metal prices declined, weakening the mining and energy sectors.
Miners were the worst performers of the day with Xstrata (LSE: XTA), Rio Tinto (LSE: RIO), Anglo American (LSE: AAL) and Vedanta Resources (LSE: VED) all lost 4%. Outsourcing firm Capita Group (LSE: CPI) also declined 4%. Other notable fallers included plumbing and heating equipment manufacturer Wolseley (LSE: WOS) and hedge fund manager Man Group (LSE: EMG), which both added 3.5%.
Royal Bank of Scotland (LSE: RBS) led the blue chips with a 3% gain. Tour company TUI Travel (LSE: TT) and satellite communications group Inmarsat (LSE: ISAT) also performed well, advancing 2%. Energy company Centrica (LSE: CNA) was up 1.4%, while telecom group BT (LSE: BT.A) added 1.2% and pharmaceutical company Shire (LSE: SHP) tacked on 1%.
US stocks tumbled in early trade. The Dow Jones Industrial Average the broader S&P 500 index slipped 1.5%, as did the technology heavy NASDAQ composite, reversing yesterday’s gains on the Fed’s reassurance that the interest rates would stay low for en extended period of time.
Commodities
Crude prices fell today as the US dollar strengthened amid losses in global equity markets, which were pushed down by Fed Chairman Ben Bernanke’s gloomy assessment of the US economy in his speech to the Congress yesterday and today’s negative economic data.
The stock market declines increased the appeal of the greenback as a safe investment to drive up its value. A stronger US dollar makes dollar-denominated commodities such as crude more expensive for holders of other currencies, pushing down the demand.
Further direction for crude prices will be set by today’s inventories update from the Energy Information Administration (EIA). Yesterday’s data from API (American petroleum Institute) revealed that stockpiles fell by 3.1 million barrels last week instead of an expected increase. However, gasoline stocks added 1.7 million barrels, while distillate stocks including heating oil were down by 834,000 barrels, which was a lesser decline than projected.
April Brent Crude was down to US$76.75/barrel, while US light, sweet crude slipped to US$78.70/barrel after recapturing the US$80/barrel mark yesterday.
Blue chip oil and gas producers turned negative today. Tullow Oil (LSE: TLW) was at the bottom of the pile with a 2% loss. Cairn Energy (LSE: CNE) was down 1.7%, while BG Group (LSE: BG) declined 1.5%. Shell (LSE: RDSB) was down 1.2%, while fellow supermajor BP (LSE: BP) declined marginally.
Petrofac (LSE: PFC) moved with the sector, shedding 1.9%, while fellow oil and gas engineering firm Amec (LSE: AMEC) posted a small loss.
Midcaps followed the trend. JKX Oil & Gas (LSE: JKX) was the heaviest faller with a loss of nearly 4%. Salamander Energy (LSE: SMDR) was down 3.6%, while Premier Oil (LSE: PMO) slid 2% and Melrose Resources (LSE: MRS) and Soco International (LSE: SIA) dropped 1.5%. Dana Petroleum (LSE: DNX) and Dragon Oil (LSE: DGO) lost 1% and Heritage Oil (LSE: HOIL) declined marginally.
Services companies also were in selling mode as Wood Group (LSE: WG) and Wellstream Holdings (LSE: WSM) retreated 2.2% and 1% respectively.
Junior companies didn’t show much movement today. Energy investor Xtract Energy PLC (AIM: XTR) moved along with the sector, shedding 6%.
Gold and silver drop on stronger US dollar
Gold was under pressure from a stronger US dollar today, failing to get back to the US$1,100/oz level after finding support at US$1,090/oz.
The American currency firmed today after falling on Ben Bernanke’s yesterday’s pledge to leave the interest rates at the current ultra-low level. Last week, the Fed raised its discount rates that it charges banks for emergency loans by 25 basis points to 0.75%, stirring up speculation that the economic stimulus package that is currently in place could be withdrawn sooner than expected.
Meanwhile, the euro continued its decline against the greenback to further weaken gold as concerns over the Greek debt crisis continued to weigh on Europe’s single currency.
After rallying on Bernanke’s comments, equity markets turned negative today to curb the appeal of riskier assets such as gold and boosting the demand for safer investments like the US dollar.
Gold was at US$1,093/oz in mid afternoon. Silver followed, dropping to US$15.89/oz, while platinum firmed, reaching US$1,513/oz.
All blue chip miners were in decline today. Randgold Resources (LSE: RRS), silver miner Fresnillo (LSE: FRES) and platinum producer Lonmin (LSE: LMI) all lost nearly 2%.
Specialty chemicals firm Johnson Matthey (LSE: JMAT) declined marginally.
Midcaps did better as while silver producer Hochschild Mining (LSE: HOC) slid 1.2%, fellow FTSE 250 constituent Aquarius Platinum (LSE: AQP) gained 2.1% and gold miner Petropavlovsk (LSE: POG) was flat.
Argentina focused gold explorer Patagonia Gold (AIM: PGD) was the bets performer among the juniors with an 8% advance.
Most other small caps declined. Australian gold and copper prospector Solomon Gold (AIM: SOLG) and Stellar Diamonds (AIM: STEL) declined 6.5% and 5% respectively, while commodity asset development company Mercator Gold (AIM: MCR) and Western Australia operating Norseman Gold (AIM: NGL) dropped 4.5% and 4%.
Base metals extend losses
Base metals also declined with copper and nickel sliding to US$3.21/lb and US$9.21/lb, while zinc dropped to US$0.97/lb.
Mining stocks fell on lower metal prices. Rio Tinto (LSE: RIO) and Anglo American (LSE: AAL) led the retreat with losses of nearly 3.5%. Eurasian Natural Resources (LSE: ENRC) was close, sliding 2.8%. Vedanta Resources (LSE: VED) was down 2.7%, Kazakhmys (LSE: KAZ) declined 2.5% and the world’s largest miner BHP Billiton (LSE: BLT) lost 2.3%.
Antofagasta (LSE: ANTO) did relatively well, shedding just 1.6%.
London's only listed pure iron ore producer and FTSE 250 constituent, Ferrexpo (LSE: FXPO) moved with the market, slipping 1.4%.
Specialty minerals exploration and development company Thor Mining (AIM: THR) led the juniors with a 12.5% rally after announcing its intention to acquire the Dundas gold project in Australia.
Copper and nickel explorer Regency Mines (AIM: RGM) followed with a 9% climb, while Tunisia focused metal miner Maghreb Minerals (AIM: MMS) and iron ore focused investor Red Rock Resources (AIM: RRR) advanced 7.2%. Botswana operating nickel and copper miner Discovery Metals (AIM: DME) and South American focused junior miner Herencia Resources (AIM: HER) added 6.5% and 6% respectively.
Russia focused copper and nickel miner Amur Minerals (AIM: AMC) and Forte Energy (AIM: FTE) headed in the opposite direction with losses of 5%.
Banks, insurance, private equity
Financial stocks were mixed. Royal Bank of Scotland (LSE: RBS) and fellow part-nationalised bank Lloyds (LSE: LLOY) led the sector with gains of 3.3% and 1% respectively. Peers Barclays (LSE: BARC) and Standard Chartered (LSE: STAN) slipped 1.5% and 1.1% respectively, while HSBC (LSE: HSBA) declined marginally.
Admiral Group (LSE: ADM) was flat, while other insurance companies slipped into the red. Legal & General (LSE: LGEN) and Prudential (LSE: PRU) were down 2.5%. Standard Life (LSE: SL) lost nearly 2%, while RSA Insurance Group (LSE: RSA) declined 1.4% and Aviva (LSE: AV) was down 1.2%.
Private equity group 3i (LSE: III) was down 3.2%.
Small Cap Movers
Other notable movers among the small caps included IP commercialisation company Amphion Innovations (AIM: AMP), which lost 12%, and novel pesticides and plant nutritional products developer Plant Impact (AIM: PIM) with a 22% loss on equity issue.
Large and Mid Cap News
British Gas parent company Centrica PLC (LSE: CNA) said it has signed an agreement with Suncor Energy (TSX: SU, NYSE: SU), under which Centrica will acquire Suncor’s Trinidad and Tobago portfolio of gas assets for £246 million in cash.
Engineering, construction and services group Balfour Beatty PLC (LSE: BBY) said its 50 percent controlled infrastructure contractor Gammon Construction Ltd has won a HK$2.4 billion, or £195 million, contract for the widening of the Tolo and Fanling Highways in Hong Kong for the Hong Kong Special Administrative Region Highways Department.
Small Cap News
Thor Mining (AIM, ASX: THR) is set to acquire the Dundas gold project, which is located in the broader Norseman area south-east of Kalgoorlie in Western Australia. Dundas consists of 3 tenements covering 340km₂ in the Western Australian Goldfields, approximately 100km southeast of Norseman. The proposed deal marks the first step in Thor’s new exploration strategy, which is targeting economically favourable gold prospects rather than base metal projects.
Dual-listed oil & gas explorer Range Resources (ASX: RRS, AIM: RRL) has encountered significantly better oil and gas production than expected following successful connection of the Smith #1 well to the sales line earlier this week.
Australian-listed coal mining and development company Coal of Africa (ASX: CZA, AIM:CZA) has moved to a 100% interest in the Limpopo Coal Company.
Irish oil and gas exploration and production company Providence Resources PLC (AIM: PVR, IEX: PRR) said it has signed a strategic collaboration agreement with PGS Ventures A/S, a division of Petroleum Geo-Services (PGS), an industry leader in offshore seismic data acquisition and processing.
Marketing software specialists smartFOCUS Group (AIM: STF) has launched a new marketing software procuct for social networks, which will allow placing a value on an individuals' influence across a range of social networking sites including Twitter, Facebook, LinkedIn, Delicious and Digg.
African Aura Mining (AIM: AAAM) has commissioned an airborne geophysical survey across its Nkout, Ngoa and Akon iron ore projects in southern Cameroon to define priority targets for a drill programme scheduled for this year.
Healthcare and technology investor Amphion Innovations (AIM: AMP) announced that its partner company PrivateMarkets has appointed a new director of sales, Jeff Evans. In the role, Evans will support the company as it refines it sales approach in the electric power industry. The PrivateMarkets software platform enables structured bilateral physical-commodity trading.
Sinclair Pharma (AIM: SPH) expects its performance to pick up in the second half of the year following what the company said were the busiest three months in history with new acquisitions made and cost cutting moves undertaken after revenues posted year-on-year declines during the first half of the current year and profits turned into losses.
London Mining (AIM: LOND) is continuing to deliver development milestones across all four of its key iron ore projects. The AIM-listed mine developer has a busy schedule in 2010 with each of the four projects targeting the next significant development milestone, including a number of feasibility studies and new JORC-resource statements.
Broker Fairfax has initiated coverage of Landore Resources (AIM: LND), saying the company’s experienced management team and diversified asset portfolio represented a strong investment case and projecting a continuous news flow this year featuring drill results, resource upgrades and engineering study results on major targets.
Solomon Gold (AIM: SOLG) said that following the completion of the scrip-based acquisitions of Acapulco Mining and Central Minerals and relevant allotments, chief executive Nicholas Mather has a 15.9% stake in the company compared to the 19.1% shareholding he had before the acquisition.
Food processing equipment maker Pursuit Dynamics (AIM: PDX) said it is re-entering the brewing industry with a suite of new products and services following the completion of several brewing projects and an extensive test program with a large international brewer.
Island Oil & Gas (AIM: IOG) and San Leon Energy (AIM: SLE) have agreed the terms of a recommended share-based merger, which values Island at £13.74m.

Plant Impact (AIM: PIM) has announced a share issue to raise £2.1 million to hire new sales and marketing personnel to drive sales across the company’s existing markets and accelerate the roll-out of its new productions into new markets.

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