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Falling miners end FTSE's winning streak
Chris Tryhorn The Guardian, Tuesday September 2 2008
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Falling mining and energy stocks weighed down the FTSE 100 yesterday on a day of light trading, with Wall Street closed for business on Labor Day.

The blue-chip index lost 33.8 points to close at 5602.8, ending a three-day winning streak. The list of fallers was dominated by mining and energy stocks, which were pulled down by the declining cost of commodities. Specifically, the downgrading of Hurricane Gustav to category two helped to weaken the oil price.

Mining group Rio Tinto saw shares fall 219p to £50.10 as the president of Chinese aluminium maker Chinalco said it could increase its stake in the company, given the right market conditions. Chinalco first took a stake in Rio Tinto in January along with US group Alcoa and is thought to be aiming to stop BHP Billiton taking the group over.

Enterprise Inns ended the day down 7.5p at 296p, continuing the pub group's recent bad run that could see it fall out of the FTSE 100 next week.

The shares have lost more than half their value since this time last year, hit by falling consumer confidence, the effect of the smoking ban and uncertainty about the group's potential conversion into a real estate investment trust (Reit).

British Airways reversed an early slide to end the day the FTSE 100's biggest percentage gainer, up 4.3% or 10.75p at 261.75p. The group is also said to be interested in buying the 43% stake in Austrian Airlines - worth about £130m - which is being offloaded by the government in Vienna.

RSA Insurance was another major gainer - up 5.9p to 156.7p amid the latest bout of rumours that it could receive an offer from Zurich Financial.

Another stock benefiting from bid talk is Sainsbury's, which was up another penny to 348.75p. Speculation began last week that the supermarket group's suitors from last year, the Qatar Investment Authority, could return with a fresh offer pitched at 500p a share, and the shares have been nosing higher ever since.

Oil services group Petrofac lost 23p to 629.5p on the back of the falling oil price despite making earlier gains after announcing a joint venture in the United Arab Emirates.

London Stock Exchange ended the day down 20.5p at 772.5p, after it cut fees in the face of competition such as new trading platform Turquoise.

Away from the blue chips, media group Informa was boosted by speculation that the private equity consortium that has been stalking it since June has finally got financing in place. Providence Equity Partners and Carlyle Group entered the fray after Informa's planned nil-premium merger with United Business Media collapsed and have been working on a deal at 506p a share. Shares in Informa, the owner of Lloyd's List and academic publisher Routledge, gained 14.75p to close at 440.5p.

The biggest percentage faller in the FTSE 250 was the Birmingham-based floor distributor Headlam, which was down nearly 12% or 39p to 294.5p.

The company warned it could struggle to hit its targets for this year, after reporting a slide in like-for-like sales of 4.8% in July and 3% in August. First-half pretax profit was up 1.7%.

"Due to the unpredictable nature of the current market place, the board believes we face a challenge to meet our original trading objectives for 2008," the company said in a statement.

Buy-to-let lender Bradford & Bingley fell 2.25p to 46.75p, taking it further adrift of the 55p at which its botched rights issue was priced, as Fitch cut the company's long-term issuer default rating by one notch. Meanwhile, analysts at Panmure maintained a sell rating on the stock after last week's interim results, which showed a £27m loss. "B&B is shrinking its business amid rising bad debts and continued margin pressures," Panmure said.

Harry Potter publisher Bloomsbury fell 2p to 168p despite a couple of positive analysts' notes. Investec said it remained "keen buyers" of the stock, praising its "very strong cash profile". "This is a rare media stock where we have real confidence in the outlook for the year," said Richard Menzies-Gow, a media analyst at Dresdner Kleinwort.

Aim-listed minerals group Gippsland added 0.5p to 4.75p after revealing that ore reserves in its Abu Dabbab tantalum-tin project in Egypt had more than doubled to just over 30m tonnes. "This massive increase in the project's ore reserve will undoubtedly provide the global tantalum market, investors and project financiers with increased confidence in the project," said the company's executive chairman, Jack Telford.

Also on Aim, independent TV producer DCD Media gained 3.5p to 27.5p after striking a licensing deal with a classical music website. DCD has licensed 1,100 hours of its performing arts catalogue to Classical TV for streaming over the internet in return for £1.8m cash and a 20% stake in the venture.

Aim debutant BioEnergy Africa, which is developing the production of ethanol from sugar cane in southern Africa, ended the day at 14.5p.