Market report: Tuesday close

 

Rocketing metal prices, combined with stock shortages, provided another boost to mining shares today.

Mickey Clark

Gold climbed $11.44 to $916.64 an ounce while copper soared 13% to $365. But platinum had all the tongues wagging as its price surged $93 to $2157 an ounce. Platinum's leap was fuelled by supply shortages brought on by continuing South African power cuts that have dogged production of some of the big mining companies for weeks now.

Investec has raised its 2008 price forecast for platinum from $1400 an ounce to $1800 and for next year from $1300 to $1600.

The broker says the news is positive for the likes of Lonmin, up 59p at 3463p, where it has repeated its buy rating and jacked up its target from 3500p to 3850p. But it says a better bet may be Aquarius Platinum, which it also rates a buy with a price target up from 700p to 925p.

Investec says Aquarius, up 44p at 794p, is better-placed to work around the power constraints and has fewer internal issues to upset production.

Elsewhere, Kazakhmys put on 51p at 1448p and Anglo American 43p at 3147p.

The South African Competition Commission-has approved the acquisition of the Cullinan diamond mine by Petra Diamonds, flat at 125½p, from De Beers Consolidated Mines. Petra expects the remaining conditions for the acquisitions to be met between May and July. A Petra Diamonds-led consortium said in November it had agreed to buy the mine for one billion rand (£67.2m).

Shares generally were able to extend yesterday's gains after recovering from opening falls. Once again, the lack of turnover lent an exaggerated look to price movements. The FTSE 100 index rose 20.3 points to 5966.9.

Banks led the charge following fullyear results from Barclays, up 17p at 477p. There were also gains for Lloyds TSB, which reports on Friday, up 7½p at 432p, and HBOS, 20p better at 659p. Alliance & Leicester, reporting tomorrow, traded 17½p cheaper at 528p.

Centrica drifted 3p to 333½p as Lehman Brothers cut its target on the shares from 440p to 400p ahead of fullyear results on Thursday and warned of difficult times ahead for the British Gas supplier because of higher prices.

However, the US broker reckons the group will use the results to sweeten shareholders and is hopeful it will introduce its share buyback programme at a time when other companies are cutting back because of a shortage of cash. Lehman has cut its earnings per share forecasts for 2008 from 31.73p to 30.39p and for next year from 29.65p to 27.43p but sticks with its overweight rating.

Also reporting this week is Kingfisher - up 5.1p at 136.7p. Investec has repeated its sell rating and dropped its target from 140p to 115p ahead of Thursday's full-year numbers. Investec expects the B&Q retailer to report a 2.7% rise in fourth-quarter sales and pre-tax profits broadly flat at £383m against £386m the previous year.

United Business Media dipped ½p to 517p after UBS slashed its target from 900p to 750p and braced itself for a second-half downturn at the publishing and conference facilities provider. The broker conceded it does not expect the company to flag any signs of a downturn in the short term, but said it was resigned to one anyway.

Aim-listed NetStore jumped 5½p to 23½p after saying it had received a bid approach. A review of streamlining its four complex accounting systems into one continues, and the outcome is not yet certain, but it expects the result to be a significant reduction to previously reported pre-tax profit in accounting periods to 30 June 2007.

Stock market information

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Financial data - newspaper and pen

TOMORROW'S AGENDA

• Minutes from the Bank of England monetary policy committee meeting will be scrutinised for clues on further interest rate cuts. The committee this month opted to reduce the benchmark rate by a quarter-point to 5.25%. Economists predict the vote will have been unanimous, but there is talk arch-dove David Blanchflower may have favoured a half-point cut while more hawkish members could have supported keeping rates unchanged amid fears over spiralling inflation.

• Alliance & Leicester is expected to report a 30% profits slump in its full-year figures. The mortgage lender admitted last month that it would take a £185m credit crunch related hit, more than three times its original estimate. It also said it had secured funding to the end of this year in a bid to ease liquidity fears that have battered the share price. Analysts warn 2008 is likely to be another tough year for the entire banking sector.