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Mining shares took a pummelling today on the back of a triple-whammy of woes.
Weaker commodity prices, a stronger dollar and news that China had inked a deal with an Australian miner in an apparent bid to push global suppliers to cut prices sent shares in the sector plunging.
China's largest steelmaker Baosteel has reached an agreement with Fortescue Metals Group to pay around 3% less than what its rivals are asking for from Chinese mills.
The world's biggest iron-ore consumer is trying to reduce its reliance on Rio Tinto, off 107p at 2249p, and BHP Billiton, 53p lower at 1500p. But Rio said it does not believe a price pact between Fortescue Metals and Baosteel will lead to an industrywide cost decline.
The rest of the sector was also hit by worries that the economic recovery is being derailed, with Anglo American diving 105½p to 1822p and Kazakhmys dropping 34p to 863½p. Xstrata, which is said to be upping the ante in its bid to win over Anglo American investors about the benefits of a takeover, lost 41½p to 743½p.
Stock markets around the world fell sharply today amid growing fears that the US economic revival has stalled.
Shares on Wall Street were sent reeling on Friday, following a sharp drop in consumer confidence. The shock waves reached Asia this morning, where Hong Kong and Shanghai plunged, along with Tokyo, despite news that the Japanese economy had emerged from recession after reporting its first quarterly growth in more than a year. The selling spilled over into London, where leading shares extended Friday's losses, with the FTSE 100 index diving 77.43 to 4636.54. Wall Street followed the rest of the markets lower this afternoon, with the Dow plunging 173.21 to 9143.05.
But Aviva topped the Footsie risers, up 5.6p at 377.4p, and one of only 10 blue-chip winners, thanks to some positive broker sentiment. HSBC has upped its rating on the insurer from underweight to neutral as the partial flotation of Delta Lloyd, its Dutch subsidiary, and dividend cut will rebuild Aviva's capital buffer.
Shares in Raymarine leapt over a third after the supplier of radars and radios for boats confirmed it is in talks about a sale with a number of companies, including Garmin in the US, best known for making satnav systems for cars. Raymarine's shares soared almost a third, up 4¾p to 17½p.
Last month Raymarine said it was looking for a cash injection or to sell the business after it posted a 24% slump in first-half sales. It has appointed Hawkpoint as an adviser. Panmure Gordon has doubled its target from 12p to 24p and raised its rating from hold to buy, saying Raymarine has an uncertain financial future unless new funds or a new owner emerges.
Meridian Petroleum firmed 2¼p to 56.2p amid growing optimism the oil exploration firm may soon strike it rich. Meridian says results from its seismic survey on its PEL 82 licence in South Australia have increased prospects for oil discoveries. Possible drilling locations are being further evaluated.
But rival Hardy Oil & Gas lost 9½p to 290½p after plunging into the red with a net loss of $4.3 million (£2.6 million) in the first half. That compares with a profit of $6.2 million for the corresponding period last year. It says it is to drill its first well on the D9 exploration block during the second half.
Altium Securities appears to be doing some catching up with Carpetright, down 19p at 810p. It has raised its target price from 450p to 590p, but continues to rate the shares a sell. This month the share price struck a
19-month high after the UK's biggest carpet retailer reported a return to underlying sales growth. It also cheered the City by saying it would benefit from any signs of recovery in the housing market and the closure of some rival Allied Carpets stores.
Shares of Majestic Wine have enjoyed a strong performance of late, coming up from around the 188p mark during the past month to trade at 211½p today, down 8p. But Altium reckons the shares have run far enough and has downgraded its rating from hold to sell.
