London close:Unemployment data boosts sentiment

17th Oct 2012 16:58

The Footsie finished the day firmly in the blue and just short of the day's high after better-than-expected unemployment figures lifted sentiment.Miners were also playing their part, boosted by investor confidence ahead of the third quarter growth data due out from China, which is expected to increase demand for commodities. Metals futures were higher for gold, silver, platinum and copper. Chinese Premier Wen Jiabao was quoted as saying that the Chinese government is confident of achieving 2012 growth targets of 7.5%. The number of people in the UK out of work fell by 50,000 between June and August to 2.53m. This put the unemployment rate at 7.9%, down 0.2% from the March to May figure. Most analysts had expected the figure from the Office of National Statistics to remain steady at 8.1%. Dr Howard Archer, chief UK economist at IHS, said the figures marked "another set of impressively resilient and healthy labour market data which gives a lift to recovery hopes".However, he added that the employment figures were being propped up by ongoing restrained earnings growth as well as significant increases in part-time jobs and self-employment.The day's other big economic news related to the October meeting of the Bank of England's Monetary Policy Committee (MPC)."There were some differences of view between members about the outlook and the likelihood that further easing in policy would be required," the minutes of the meeting, released this morning, revealed.Some members of the MPC felt that there was still considerable scope for asset purchases to provide further stimulus. Other members, while acknowledging that asset purchases had the scope to lower long-term yields further, questioned the magnitude of the impact that lower long-term yields on corporate debt and equity would have on the broader economy at the present juncture.Most economists remain convinced that the central bank will go ahead in any case with a widely expected increase in the size of its asset repurchase programme by £50bn.BP bouncesBP rose on reports that the company and its Russian billionaire partners are in talks to sell their TNK- BP venture to OAO Rosneft. The billionaires, represented by the AAR group, are seeking to sell their 50% holding to Rosneft for $28 billion, according to news agency reports.BP is also negotiating to sell at least some of its shares, an unnamed source told the news service.Guinness brewer Diageo saw organic net sales growth of 5% in the July to September, while volumes were up 2%. Europe remains a problem area for the drinks brands giant, but the US market is resilient and it is achieving fast growth in emerging markets.The firm is in talks to buy a stake of about 20% in Vijay Mallya's in a deal that would give it management control of the Indian distiller, according to news agency reports. Diageo would buy new shares in United Spirits and also purchase part of Mallya's 28% stake, said the news agencies sources. Diageo would get the right to appoint United Spirits's Chief Executive Officer and other key managers, while Mallya is expected to remain Chairman, they said.The Royal Bank of Scotland is set to leave the government insurance scheme that was set up at the height of the financial crisis to protect the company from collapse. Analysts said this could pave the way for RBS to be sold back into the private sector. It is currently 82%-owned by the UK taxpayer after receiving a £45bn bailout in 2008.The banking sector rose despite comments from Paul Tucker, the Deputy Governor of the Bank of England, who warned that the worst could be yet to come for the sector. There was a flood of mining companies providing third quarter production updates this morning. Anglo-Australian mining giant BHP Billiton saw iron ore output rise year-on-year in the third quarter, but fall from the previous quarter's production levels as a result of the planned shut-down associated with the Inner Harbour expansion project in Western Australia. Iron ore production was up 1% year-on-year but down 3% quarter-on-quarter to 39.8m tonnes.Xstrata, the Switzerland-based miner which looks set to merge with commodities trader Glencore, said volumes of thermal coal, zinc and lead in concentrate and zinc metal in the third quarter increased year-on-year. Volumes of copper and nickel declined, however.The third quarter of 2012 was a strong one for mining firm Polymetal International, prompting the company to revise up its 2012 production guidance. Quarterly gold equivalent production hit a new high of 317,000 ounces, and was up 48% on the corresponding quarter of 2011 and up 7% on the previous quarter of 2012.Beowulf, the Sweden-focused mineral exploration company, jumped after it said latest assay results from its completed drill programme at its Kallak North mine were "most encouraging". The results included indications of further high grade iron mineralisation on the southerly extension of the deposit, the company said. It has also received approval from the County Administrative Board of Norrbotten for test mining at the site.Shares in Shanta Gold dropped like a stone after it went back to equity markets to raise another 30 million dollars "to address short-term financing requirements". The firm also said initial production had been lower than anticipated at its flagship New Luika Gold Mine in Tanzania.Bumi row rumbles onFinancier Nat Rothschild is "completely, 100 per cent wrong" about the controversial deal with the Bakrie Group that could end the feud at Indonesian mining firm Bumi, according to the firm's Deputy Chairman. Rothschild resigned from the board of Bumi on Monday, saying he had lost confidence in the management's ability to stand up for investors. In his resignation letter he accused the company's Chairman of being "complicit" in oppressing minority shareholders.The company was also in the news today after announcing that it has appointed the Rothschild Group to evaluate the proposed deal. Cable & Wireless Communications, already in talks with the Bahrain Telecommunications Company (Batelco) about a possible sale of its Monaco & Islands business unit, has confirmed that it is also in talks regarding a potential sale of its business in Macau. Responding to recent press speculation, the international mobile communications networks operator confirmed it is in discussions with CITIC Telecom International Holdings Limited regarding a potential sale of its 51% shareholding in Companhia de Telecomunicações de Macau (CTM). CITIC is a 20% shareholder in CTM. Online gaming firm 888 has raised full year earnings guidance after a strong third quarter and a good start to the fourth. "The final quarter [Q4] has started positively with average daily revenues more than 7% ahead of the strong Q4 2011. A disciplined approach to our costs, and our analytics driven marketing spend proving highly efficient, means we now expect our EBITDA [earnings before interest, tax, depreciation and amortisation] for the full year to be significantly ahead of current market expectations," revealed Brian Mattingley, 888's Chief Executive Officer.Also motoring higher after a well-received trading update was car dealer Vertu Motors, which served notice to analyst to bump up their full year earnings forecasts after a solid first half of the financial year. Pre-tax profit was up 26.8% to £5.2m (2011 H1: £4.1m). Underlying profit before tax rose 16.3% to £5.0m from £4.3m the year before.Other marketsBrent crude for November delivery fell a dollar to $113 a barrel on the InterContinental Exchange (ICE). FTSE 100 - RisersEurasian Natural Resources Corp. 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