London open: Miners jump after Fed pledges low rates

26th Jan 2012 08:33

London's blue chip stocks rose in early trading on Thursday, following on from a surge last night on Wall Street after the Federal Reserve pledged to keep the federal funds rate low until late 2014. Meanwhile, Greece is again in focus as talks resume between private creditors and the government. The head of Institute of International Finance, Charles Dallara, is to meet with Greek Prime Minister Lucas Papademos in Athens again today.The Fed, which had previously said it would maintain the federal funds rate between 0% and 0.25% until mid-2013, announced yesterday that it intends to leave them as they are until late 2014. According to the Federal Open Market Committee (FOMC), "economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."While the move fuelled a strong showing by US stocks last night, some noted that the decision reflected the central bank's concerns over economic growth: one economist from RBC Capital Markets (Tom Porcelli) was quoted as saying that "this drives home one important fact, the Fed is scared." Meanwhile, the World Economic Forum continues in Davos with German Chancellor Angela Merkel repeating her call for a union of "budgets, competition and solidarity". "We must ask ourselves what role Europe should play in the world", she said. "We must show that all of the (member states) are strong, although some stronger than others (...) We can only be successful if we are unified."Also helping the mood was Morgan Stanley's ex-Chief Economist, Stephen Roach, who said that fears of a banking crisis in China are "overblown", adding that he "would not add much downside" to estimates for a slowdown in Chinese economic growth to below 8-8.5%.MINERS JUMP AS FED PLEDGES LOW RATESWith the Fed pledging to do its best to strengthen the economy, the dollar weakened against the euro, sending metals prices higher. As such, the miners were in demand in early trading in London with Randgold Resources, Evraz, Rio Tinto and Fresnillo among the top performers.Kazakhstan-based copper miner Kazakhmys wasn't far behind after saying that it met all of its major production targets in 2011 and expects to maintain similar levels of copper output in 2012. The group's sales contracts for the coming year have all been completed. Sector peers Polymetal International, BHP Billiton, Glencore and Vedanta were the next highest risers.Mining giant Anglo American rose after it said iron ore production in the final quarter of 2011 increased by 5% from a year earlier to 12.4m tonnes, mainly due to initial production from Kolomela mine and a continued improvement in performance at Amapá.Royal Bank of Scotland was higher on rumours that US investment bank Jefferies is close to buying the bank's corporate broking arm Hoare Govett. Meanwhile, chip designer ARM Holdings led the fallers, pulling back after strong gains made yesterday following Apple's stellar quarterly results, a company whose gadgets include ARM products.FTSE 250 MOVERS: EASYJET FLYS HIGH, MISYS DROPSBudget airline easyJet jumped 9% after it reported a 16.7% increase in revenue for the quarter ended 31 December 2011, helped by higher seat prices and the absence of disruptive winter weather.The worst performer was financial software provider Misys after it swung to a pre-tax loss of £3.6m in the first half, down from a profit of £18.8m the year before. In its interim results statement the company said it was leaving its medium-term financial targets for the two years to May 31st, 2013, unchanged but, in in view of continuing difficult times for its core target market, it has put in place contingency plans to squeeze out another £6m to £8m of operational cost savings over the second half of this financial year. Joining in with the strong performance seen elsewhere in the sector, Russian gold miner Petropavlovsk rose nearly 6% after it saw production over the whole of 2011 up by almost a quarter from 2010's levels. BCFTSE 100 - RisersJohnson Matthey (JMAT) 2,071.00p +3.03%Randgold Resources Ltd. (RRS) 7,000.00p +2.56%Evraz (EVR) 453.90p +2.53%Rio Tinto (RIO) 3,802.00p +2.44%Fresnillo (FRES) 1,785.00p +2.41%Kazakhmys (KAZ) 1,136.00p +2.07%Polymetal International (POLY) 1,090.00p +1.96%BHP Billiton (BLT) 2,169.50p +1.90%Glencore International (GLEN) 426.25p +1.86%Vedanta Resources (VED) 1,173.00p +1.82%FTSE 100 - FallersARM Holdings (ARM) 588.00p -1.59%British Sky Broadcasting Group (BSY) 662.00p -1.56%Imperial Tobacco Group (IMT) 2,248.00p -0.66%HSBC Holdings (HSBA) 533.70p -0.61%BP (BP.) 472.40p -0.45%Essar Energy (ESSR) 135.40p -0.44%Royal Dutch Shell 'A' (RDSA) 2,271.00p -0.31%G4S (GFS) 269.20p -0.22%Tate & Lyle (TATE) 674.50p -0.22%Royal Dutch Shell 'B' (RDSB) 2,351.50p -0.19%FTSE 250 - RiserseasyJet (EZJ) 440.00p +8.96%Petropavlovsk (POG) 736.00p +5.67%Ashtead Group (AHT) 237.40p +3.67%Aveva Group (AVV) 1,640.00p +3.47%Daily Mail and General Trust (DMGT) 453.00p +3.35%Hochschild Mining (HOC) 485.90p +3.23%Afren (AFR) 129.40p +2.94%Regus (RGU) 97.00p +2.86%Informa (INF) 399.30p +2.73%Centamin (DI) (CEY) 97.25p +2.69%FTSE 250 - FallersMisys (MSY) 301.00p -7.53%PayPoint (PAY) 570.00p -2.56%Heritage Oil (HOIL) 198.00p -1.59%Cable & Wireless Communications (CWC) 40.70p -1.57%Anglo Pacific Group (APF) 277.00p -1.32%Morgan Crucible Co (MGCR) 299.70p -1.19%Bankers Inv Trust (BNKR) 395.10p -0.85%Euromoney Institutional Investor (ERM) 670.00p -0.74%WH Smith (SMWH) 550.00p -0.72%JPMorgan European Smaller Companies Trust (JESC) 686.00p -0.72%