Market report: Friday close
The worsening credit crunch is likely to claim two more casualties when the regular quarterly reshuffle of the top companies that make up the FTSE 100 index takes place next week.
Those almost certain to face the drop are mortgage lender Alliance & Leicester, down 22.25p at a new record low of 377¼p, and the UK's biggest housebuilder Persimmon, down 16p at 447¼p, which, these days, is not as big as it was.
The loss of Persimmon means there will no longer be any housebuilders represented in the top-flight following the relegation of Barratt Developments, 9p off at 140¾p, in March.
A&L has seen its share price shrink from a peak of 1175p since the start of the year with its stock market value now just £1.6bn. Persimmon has also slumped from a peak of 1319p this year following the collapse in the housing market and the subsequent dryingup of mortgages. Its stock market value is now just £1.39bn.
They are likely to be replaced by an old Footsie 100 candidate Invensys, 8¼p cheaper at 322p, and a newcomer Ferrexpo, up 26¾p at 433¾p. Ferrexpo is an iron ore miner with assets in Ukraine and exports iron ore pellets for use in the production of steel. Ferrexpo joins a long list of miners already contained in the Footsie 100 and is capitalised at £2.49bn. Invensys makes industrial valves and boasts a price tag of £2.6bn.
Another surge in the price of crude oil set the pace for City investors today. The price of North Sea Brent crude jumped $2.46 to $130.25, paving the way for gains by oil explorers such as Cairn Energy, up 116p at 3305p, Tullow Oil, 6½p at 900½p, BG 29p at 1256p and Royal Dutch Shell 5p at 2097p.
Commodity prices were also ticking better, leading to a mark-up for the first time this week in shares of the big mining companies.
Merrill Lynch points out that markets in commodities, such as coal and platinum, remain tight and that should be enough to drive the price in the medium term. But base metals appear mixed. The price of nickel has dropped 20% in recent weeks due to a slowdown in demand from China but copper continues to power ahead.
Kazakhmys added 3p to 1628p, BHP Billiton 25p to 1903p and Xstrata 145p to 4107p. In spite of this, the FTSE 100 closed at 5,906.80, down 88.50.
Scottish & Southern Energy helped lead blue chips higher with a rise of 35p at 1509p. Morgan Stanley has raised its rating on the power and water generator from equal weight to overweight and jacked up its target from 1450p to 1780p. It says prospects have improved materially with the company enjoying higher power prices and increased market share. But Moody's has downgraded its backed senior unsecured rating from A1 to A2.
Salamander Energy, up 12p at 335p, which is searching for oil and gas in Asia, said the reserve estimates at the Bualuang field in Thailand have been upgraded following drilling. The field's proven oil reserves have been raised from 7.2m barrels to 11m and probable reserves from 14.9m to 20m barrels.
It was the first day of dealings on AIM for explorer Indus Gas following a placing of 15.2m shares at 203½p by Arden Partners valuing the company at £300m. Indus has a 90% participating interest in a petroleum concession in mid-Indus Basin, Rajasthan, India. The price settled at 201p.
Bioscience specialist BTG jumped 18¼p to 141¼p following the successful conclusion of phase 2 trials of its varicose vein treatment in the US.
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