Morning:
8°c
London-listed Indian mining group Vedanta's huge debt mountain today threatened to cast a long-term shadow over its expansion plans as credit rating agency Standard & Poor's said it had placed the group on its CreditWatch list with "negative implications".
Vedanta, down 17p to 1297p, has a BB rating but S&P said the listing was necessary to reflect the rising risk from Vedanta's "sizeable capital expenditures and appetites for debt-funded acquisitions in a severe industry downturn".
Vedanta has more than $7.6 billion (£4.6 billion) of capital expenditure in the pipeline, which S&P argues will pile on the pressure on funding and liquidity during the "current period of uncertain internal cash flow."
Oil was also in the limelight today as crude surged back over $70 a barrel. Brent rose 28 cents to $70.23 while US crude went as high as $70.77, pushing petrol prices up by 1.5% this week.
Royal Dutch Shell was 3p higher at 1521p. Petrofac was the FTSE's best performer, up 29p at 655p.
Recent concerns over supply disruption in Nigeria and the political situation in Iran coupled with growing confidence in the fledgling economic recovery have seen oil prices rise from a low of $40 three months ago.
And it's not too late to buy into oil if, as Evolution Security's Keith Morris suggests, the equity rally is running out of steam.
He reckons that a diminishing appetite for shares will drive up the price of oil as investors seek a safe haven.
In London, after a promising start that saw the FTSE 100 index push above 4300, share prices drifted down with low volumes and no fresh economic news to give direction.
A poor opening on Wall Street was enough to drive faltering blue-chips into negative territory, leaving the Footsie down 11.68 points at 4240.89. In the US, yesterday's dramatic 172-point rise was halted and the Dow fell 25.17 points to 8447.23.
Housing stocks were boosted by positive comments on sales price and transaction levels from Berkeley's well-respected managing director Tony Pidgeley, who today moved up to the chairman's seat.
Berkeley was up 14p at 819.5p, Bovis rose 2.5p to 365p and Redrow gained 1.75p at 195p.
Plumbing supplier Wolseley, which is closely aligned to the housing market here and in the US, was one of the best performers, up 35p at 1113p.
A note from Barclays focused attention on the mining sector. It is shunting BHP Billiton, 17p lower at 1348p, from overweight to equalweight on the grounds that its defensive qualities are going to be less sought-after in an improving economy.
It reckons the premium punters have been willing to pay to hold BHP is "no longer appropriate" despite its management team being "one of the best in the business".
With investors increasingly able to stomach riskier plays once more, Barclays is slashing its target to 1650p from 2100p.
It is advising clients to buy up bid target Anglo American, upgrading it to overweight from equalweight. It sees it hitting 2300p - up from a target of 1700p.
With Anglo, down 40p at 1790.5p, likely to put up a "vigorous defence" against the merger proposal from Xstrata, 19p ahead at 688.7p, Barclays is betting on either a higher bid price or a white knight.
Traders were keeping a close eye on Dana Petroleum, down 7p at 1347p.
RWE's successful raising of £1.5 billion in recent days has triggered much hopeful talk of a forthcoming bid.
Specialist life assurance group Just Retirement - no prizes for guessing its speciality - put on 6.25p to 70.75p after revealing it is in takeover talks with private-equity group Permira.
The price on the table is 76p a share, a premium of 18% to last night's closing price, which values the company at around £225 million.
Just Retirement 'fessed up to takeover interest way back in November but Permira has been moving as slowly as one of Just Retirement's Zimmer-framed clients.
Permira bid vehicle Avalon says it has the support of majority shareholder Langholm Capital Partners, which speaks for 52% of the shares, but the bid is worth little more than half the original market capitalisation.
Just Retirement floated on AIM in November 2006 at 148p, backed heavily by Langholm.
Chilled food group Uniq added 1p to 25.75p after selling its French business for £51 million.
