Miners' glitter gives golden first day back
DEALERS got the market off to a great start as they returned for the new year to prove all that glitters really is gold.
In what turned out to be a sparkling day of trading, strong commodity prices pushed some of the market's biggest miners firmly into positive territory.
Gold traded up $12.10 per troy ounce at $528.40 in London, its highest price level since mid-December. Copper closed up $2.50 at $4429.
This had a beneficial impact on the market's top-flight and the miners in particular. Footsie new-boy Kazakhmys led the charge, closing up 35½p at 809p, its highest level since floating at 540p in October. Xstrata wasn't too far behind, finishing the day up 60p at 1420p.
Gold diggers Anglo American, up 61p at 2040p, and Antofagasta, up 42p at 1911p, also prospered.
A number of the miners also figured on the tip sheets that do the rounds at this time of year. But it was defence giant BAE Systems (up 4¾p at 386½p) that benefited most from a name check on Dresdner Kleinwort Wasserstein's list of ten to look out for in 2006.
Dresdner's Colin Grant expects BAE to build on its already strong relationship with the Pentagon. The analyst, who believes there could be further positive newsflow on its Saudi contracts, reiterated his 450p share price target for the defence firm.
Royal Bank of Scotland was another to appear in Dresdner's top ten. Fox-Pitt Kelton's Michael Helsby points out the Scottish bank was one of the worst performing shares last year, but says that this could be the year that market 'starts to value the bank's diversity'.
Shares added 47p to 1802p as RBS confirmed that it and consortium partners including Merrill Lynch had completed the purchase of a 10% stake in the Bank of China. All this and strong price rises from oil and gas firms on the back of Russia's gas row with the Ukraine ensured the Footsie closed up 62.7 points at 5681.5, the highest level since July 2001.
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City watchers suggested the strong first day surge was assisted by slightly weak manufacturing growth figures, adding weight to calls for the Bank of England's Monetary Policy Committee to lower interest rates next month.
On the other side of the pond, Wall Street closed 129.90 points up at
10847.40 after initially being dragged down by troubled US car maker General Motors.
Back in London, some of the smaller stocks managed to shine through on what was an extremely quite day for company news. Restaurant and pub group Gourmet Holdings added 1p to finish at 35½p as it paid up to £3.85m for the remaining Bel and the Dragon restaurant it did not already own.
Gourmet, run by Gareth Lloyd-Jones, bought the three other Bels in June 2004 for around £6.3m, and has now signed on the dotted line to buy the Reading site of the small riverside gastro-pub brand. The cash for this latest purchase came from a recent £5.2m fundraising, and Lloyd-Jones is keen to buy more pub restaurants.
This is Money 2006 predictions
• UK house prices
• World stock markets
• The UK stock market
• Midas share tips
Travel promotions company Landround has had a bad time of it of late, after a summer profit warning sent its shares tumbling. In all they lost 75% of their value last year.
That said, it is taking steps to get its house in order, changing the way it books sales, but the stock has yet to turn the corner.
Fidelity, which is its third largest shareholder, snapped up 44,000 shares, increasing its stake to 8.52%.
But whether it remains a believer in the Landround story or just wanted to reduce the average price of its holding remains to be seen. It remained flat at 88½p
Electra Investment Trust added 84p at 1204p as it confirmed its British marine management business Inchcape Shipping Services is sailing off to pastures new. ISS, which is based at London's Chelsea Harbour, has been sold to United Arab Emirates' investment house Istithmar for £164m.
ISS is the world's largest independently managed network of shipping agents, and is the second British shipping business to be sold to the UAE in recent times, following in the footsteps of ports giant P&O.
• KEEP an eye on media minnow Cheerful Scout (off 0.03p at 1.27p). Dealers suggested that Addworth (flat at 2.37p), the activist investor led by Mark Watson-Mitchell, has been wading into the firm's shares, and could have snapped up as much as 3%. Cheerful makes corporate videos for the likes of McKinsey and produces DVDs. Chairman Stuart Appleton told shareholders at its pre-Christmas annual meeting that sales in the current year would be ahead of last year.
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