Gold’s historic high leads to profit-taking among miners

Today, the spot price was trading at $1163.60 with dealers reporting that the precious metal continues to be seen as a hedge against any slowdown in US economic recovery.

The price of copper also came in for profit-taking and that left miners nursing losses on the day. Antofagasta fell 20½p to 896p, Vedanta Resources lost 53p at 2366p, Xstrata 23p at 1077p, and Kazakhmys 26p at 1294p. Aquarius Platinum also fell 28p to 335½p after launching a $250 million convertible bond.

The losses among miners spilled over into the broader market with investors unnerved by a late sell-off in Shanghai. The FTSE pared back some of yesterday's gains with a fall of 30.99 to 5324.51. The sell-off in equities saw investors switch into gilts. The December gilt future rose 20 ticks to £118.70 ahead of today's Treasury Select Committee meeting where members of the Bank of England's monetary policy committee will give evidence. The Debt Management Office will also auction £3.75 billion worth of Treasury 4% 2022.

Early attention focused on Lloyds Banking Group's record-breaking rights issue. The state-controlled bank is raising £13.5 billion with the issue of 36.5 billion new shares at 37p. That is a discount of almost 40%, but traders said this was less than some of them had been going for. Despite the size of the rights — the second in less than six months — dealers reported a favourable reception to the terms. The ex-rights traded at 60¼p with the nil-paid changing hands at 23½p. The underlying shares were the heaviest traded with the price recovering an early fall to trade up 0.83p at 92.31p.

Investec has chosen to raise its price target on BT Group from 125p to 150p which is probably just as well seeing as the shares closed last night at 149p. However, it chose to repeat its hold rating. Citigroup decided to slash its target price for Dana Petroleum, down 6p at 1286p, from 1580p to 1505p, although it rates the shares a buy.

A weaker dollar and better news on the housing front helped reassure investors the economic recovery was on track, boosting New York shares.

The big housebuilders led the charge after sales of previously owned homes climbed more than 10% in October. DR Horton put on 1.6% at $10.54 as Citigroup raised its rating from sell to hold.

Investors are continuing to keep a close eye on the bid for Cadbury by Kraft, which rose 0.9% to $27.4 amid growing signs rival sweet maker Hershey will be tempted to launch a counterbid. The Dow Jones rose 132.79 points to 10,450.95.

The sell-off in Asian markets continued. Tokyo investors suffered more losses as they returned from an extended weekend break. Leading shares closed at their lowest for four months with banking shares bearing the brunt on persistent worries that more financial firms will be tapping the market for equity financing. A stronger yen hurt shares of Japan's major exporters. The Nikkei 225 Average ended down 96.10 at 9401.58, its lowest finish since 17 July.

Japan Airlines plunged as much as 9.5% to a record low on worries the struggling airline could face bankruptcy if it cannot secure an agreement from its pensioners for benefit cuts.

It was also revealed that Mitsui had sold its entire stake of 11.73 million shares in JAL in the six months to 30 September. A spokesman for the trading house did not say why it unloaded its shares, which were less than 0.5% of the company. JAL finished down 7.4% at 88 yen.

Consumer lender Takefuji Corp fell almost 7% after a two-notch downgrade from rating agency Moody's.

Exporters suffered as the dollar stayed near a six-week low of about 88.60 yen.

Hong Kong shares fell as concerns about capital-raising plans by Chinese lenders sparked fears of shareholder dilution. Bank of China dropped 1.87% to HK$4.72 after it said it was studying ways to raise capital but added that it had no plans to do so for now.

The Hang Seng index was down 48.61 points at 22,722.78.