England Brushes Fears Away

Ivaylo
12 Sep, 2006
New York City

The market initially declined after four gunmen attacked the U.S. embassy in Damascus on Tuesday, but the quick solution to problem, leaving staff unscathed, soothed sentiment. The prospect of more stable commodity prices brought marketmen back to trading. BHP Billiton and Rio Tinto advanced, though smaller mining companies such as Antofagasta and Kazakhmys extended losses. By mid-day GMT, the FTSE was up 0.1%.

[R]9:30AM UK markets recovers as commodity stocks bounce back.[/R]
By mid-day GMT, the FTSE in London was up 4.2 points, or 0.1%, at 5,855.0 points. The benchmark index fell earlier as low as 5,824.2. The market hit 5,860.6 before CPI numbers showed Britain''s inflation rate accelerated more than expected in August to 2.5%, raising expectations of tighter monetary policy.

Miners have swung from some of those losses as geo-political tensions may lead to a rebound in commodity prices. Miners Vedanta , Anglo American, BHP Billiton and Rio Tinto gained, though smaller mining companies such as Antofagasta and Kazakhmys continued their losing streak. Steelmaker Corus reversed Monday''s losses as investors took advantage of the cheaper prices.

Cruise operator Carnival led the advancers, gained 3.1%. Carnival is a well-sought after stock because it is trading well off its highs and they see a lot of value. BAE Systems rose 1.5% after setting October 4 as the date for an extraordinary general meeting for shareholders to vote on the proposed sale of its 20 percent stake in planemaker Airbus . Britain''s largest software company Sage advanced after positive moves from U.S. competitors during Monday trading.

Oil producer Royal Dutch Shell declined 1% despite more stable crude oil prices as investors continued to believe that strong OPEC production would see oil prices drop further. Television company ITV was off 3.5% after Investec Securities issued a negative outlook on the stock, citing continued revenue pressures.

Utility Drax , coal-fired power station operator, fell 2.5% despite saying first-half earnings had more than tripled after wholesale electricity prices continued to soar. Analysts were looking for a slightly bigger increase.

Among the mid-caps, aerospace and defence engineering firm Cobham Plc climbed 1.5% after posting a 12.7 percent rise in underlying earnings before tax. But medical equipment maker Gyrus dipped 4.8% despite first-half adjusted earnings being at the top end of forecasts on Tuesday.