London open: Miners tank in early trade

7th Feb 2012 08:35

A fall in the mining sector outweighed a strong showing by oil stocks as the Footsie slipped in early trading.Eyes will again be on Greece with as the meeting between Prime Minister Lucas Papademos and the country's three main political parties, originally scheduled for yesterday, is due to take place later today. Athens is attempting to reach an agreement on austerity measures requested by the Troika.In domestic news, UK retail sales (in value terms) in January were down 0.3% on a like-for-like basis from the same month of 2011, when sales rose 2.3%, picking up after December 2010's snow disruption, according to the British Retail Consortium's (BRC) monthly retail sales monitor.XSTRATA AND GLENCORE TIE THE KNOTMiners dominated the fallers with the big news of the day surrounding Anglo-Swiss commodities firms Xstrata and Glencore, who have finalised terms of their agreed merger. The tie-up may be advertised as a "merger of equals" but it will be effected through commodities trader Glencore making a bid for mining firm Xstrata. Xstrata shareholders will be offered 2.8 Glencore shares for every Xstrata held. The merger values each Xstrata share at 1,290.1p, representing a premium to its share price of 1,119.50p on February 1st, the last trading day before the official announcement of merger talks. Judging by the share price reactions, Glencore has emerged as the victor in the negotiation process between the two companies. Xstrata however, was a heavy faller.While the news has prompted speculation of a bout of consolidation in the mining sector, miners were generally out of favour in the opening hour with Randgold Resources, Antofagasta, Kazakhmys, Rio Tinto, ENRC and Vedanta Resources among the worst performers.Oil giant BP edged higher after announcing a 14% increase in its quarterly dividend, the first rise since the company resumed payouts a year ago. The company announced that replacement cost (RC) profit was $7,606m in the fourth quarter of 2011, taking the full-year figure to $23,900m, compared with a loss of $4,914m in 2010. Sector peers Cairn Energy and Shell were also in demand.Burberry was also a heavy faller, tracking the luxury goods sector lower, as its European counterparts Christian Dior and LVMH taking a hit in Paris.British Airways owner International Consolidated Airlines was lower as investors continued to assess the impact of the weekend's heavy snow across Europe which led to the cancellation of hundreds of flights.TALKTALK ON THE RISEInternet and telephone service provider TalkTalk Telecom soared after raising full year earnings guidance as projected cost savings come in ahead of schedule. With just under two months of its financial year left to run, the company has raised full year earnings per share (EPS) guidance by 6% to a range running from 17.0p to 17.5p. Housebuilder Bellway fell despite saying completed home sales rose by 5% in the six months to January 31st 2012 with operating margins poised to reach double digits.Insurance and reinsurance company Amlin has estimated that its worst case position resulting from the grounding of the cruise ship Costa Concordia would be less than £10m, net of reinsurance recoveries. Shares edged higher.BCFTSE 100 - RisersCairn Energy (CNE) 355.40p +3.04%Shire Plc (SHP) 2,184.00p +2.58%Glencore International (GLEN) 469.30p +1.86%Essar Energy (ESSR) 133.20p +0.99%Aviva (AV.) 377.50p +0.88%Royal Dutch Shell 'B' (RDSB) 2,312.50p +0.87%WPP (WPP) 782.50p +0.84%Capital Shopping Centres Group (CSCG) 343.00p +0.79%RSA Insurance Group (RSA) 112.80p +0.71%Hargreaves Lansdown (HL.) 444.00p +0.68%FTSE 100 - FallersBurberry Group (BRBY) 1,401.00p -3.11%Kazakhmys (KAZ) 1,163.00p -2.27%Eurasian Natural Resources Corp. (ENRC) 705.50p -2.22%Xstrata (XTA) 1,233.50p -2.22%Randgold Resources Ltd. (RRS) 7,405.00p -2.12%Antofagasta (ANTO) 1,338.00p -1.83%International Consolidated Airlines Group SA (IAG) 183.30p -1.66%Wolseley (WOS) 2,257.00p -1.35%Rio Tinto (RIO) 3,895.00p -1.29%ARM Holdings (ARM) 570.00p -1.21%FTSE 250 - RisersTalkTalk Telecom Group (TALK) 130.00p +9.34%Centamin (DI) (CEY) 99.00p +2.48%Lamprell (LAM) 337.70p +2.24%Henderson Group (HGG) 121.90p +2.01%Shanks Group (SKS) 107.10p +1.90%Ocado Group (OCDO) 105.40p +1.84%JD Sports Fashion (JD.) 813.00p +1.75%Amlin (AML) 343.00p +1.66%Tullett Prebon (TLPR) 319.00p +1.56%Spirit Pub Company (SPRT) 53.25p +1.43%FTSE 250 - FallersMisys (MSY) 325.60p -2.81%Barratt Developments (BDEV) 116.60p -2.51%Bellway (BWY) 763.00p -2.24%Taylor Wimpey (TW.) 43.95p -1.79%Spectris (SXS) 1,592.00p -1.73%Morgan Crucible Co (MGCR) 325.30p -1.72%Ashtead Group (AHT) 243.60p -1.69%Allied Gold Mining (ALD) 140.10p -1.68%Fidelity China Special Situations (FCSS) 82.35p -1.61%Petropavlovsk (POG) 760.00p -1.55%