Shares of Coal Miners Rise

Thursday, August 17th 2006

Shares of coal mining companies finished higher Wednesday as investors’ fears over higher interest rates eased at least temporarily and oil prices dropped to their lowest level in two months.

Shares of Peabody Energy Corp. gained $3.15, or 7 percent, at $47.83 on the New York Stock Exchange. Consol Energy Inc. added $1.63, or 4.4 percent, at $39.10 on the NYSE. Shares of Arch Coal Inc. rose $1.72, or 5 percent, to $36.42 on the Big Board.

Ann L. Kohler, an analyst with Caris & Co., said the activity is a reflection of investor confidence in the broader market and continued strength in the price of natural gas, which is coal’s chief competitor.

The markets on Wednesday enjoyed a third day on the up side, due mostly to good news on the economy from the Labor Department. The core consumer price index, which measures price increases at the retail level but excludes food and fuel prices, rose just 0.2 percent in July. Economists expected 0.3 percent.

Combined with Tuesday’s producer price index, which showed a decline in core wholesale prices, the data points to a drop in inflation pressures and less pressure on the Federal Reserve to raise interest rates.

The Dow Jones industrial average rose 96.86 to close at 11,327.12. The S&P 500 advanced 9.85 at 1,295.43, and the Nasdaq composite index gained 34.53 at 2,149.54.

Light crude for September delivery ended the day on the New York Mercantile Exchange at $71.89, down $1.16.

Natural gas prices, were off the higher, heat-wave levels of a week ago, but held their ground. On the New York Mercantile Exchange, natural gas fell about 9 cents to $6.78 per 1,000 cubic feet. Last week, the Energy Department said Henry Hub spot prices would likely fall in the coming weeks but still average $7.69 per 1,000 cubic feet for the year.

Demand for coal is beginning to outstrip supply, according to a recent research note from David M. Khani, an analyst at Friedman, Billings, Ramsey & Co. Natural gas supplies are also being whittled down, which should drive coal demand higher this fall, he said.

Elsewhere in the coal sector, American Depository Shares of Rio Tinto PLC rose $6.37, or 3.1 percent, to $212.75 on the NYSE. Nacco Industries Inc. advanced rose $4.03, or 3.1 percent, to $133.05. On the Nasdaq, shares of Anglo American PLC added 46 cents, or 2.1 percent, at $22.81.

(AP)