Sector movers: Miners unwanted as investors flee from risk

25th Jun 2012 15:24

Mining stocks were heavily out of favour on Monday afternoon on the back of risk aversion, as Eurozone uncertainty continues to cloud the outlook for the global economy.Investors are currently waiting anxiously for the European Summit on June 28-29th which will see leaders discuss, and hopefully decide on, a possible cross-border 'banking union', closer fiscal integration and the possibility of a debt redemption fund.Analyst Craig Erlam from Alpari thinks that stocks and other risky assets are likely to "struggle" this week. "There are ongoing concerns that we are still not seeing the tough decisions being made by the Eurozone leaders to get the economies moving again," he said. Miners, a sector more sensitive than many to the swings in the global economic outlook, continues to bear the brunt of these concerns. As a whole, stocks in the category have fallen over 5% this past week, and remain over 17% lower than they were three months ago. Compared with a year ago, the sector average has slipped some 31%.Lonmin was providing a drag on the sector today after the platinum group metals (PGMs) miner announced the death of one of its workers at its Rowland shaft in South Africa. Operations have stopped and the shaft is to remain closed until an investigation takes place, the company revealed, causing shares to take a tumble on the FTSE 250.Analysts at Panmure Gordon pointed out that the Rowland's shaft capacity is 200kt per month or approximately 10koz of platinum. "Assuming that the investigation takes up to two weeks that would imply a production loss of up to 5koz of platinum or less than 1% of forecast FY2012E production. Clearly this is an unfortunate setback for Lonmin, but not material in scale."On the FTSE 100 benchmark, sector peers Evraz, Kazakhmys, ENRC, Xstrata and Rio Tinto were suffering heavy losses.Top performing sectors so far todayGas, Water & Multiutilities 5,012.12 +0.17%Mobile Telecommunications 4,116.36 +0.02%Bottom performing sectors so far todayIndustrial Metals & Mining 2,785.44 -4.82%Mining 16,953.76 -2.45%Automobiles & Parts 4,105.64 -2.12%Forestry & Paper 5,757.29 -1.93%Life Insurance 4,014.14 -1.90%BC