Soaring platinum brings mining rebound

Miners were in the spotlight today, as platinum prices climbed 11% in early trading to a record high, before later giving back some of their gains.

Dealers said the platinum market was small compared with gold and silver, and was very illiquid, leading to volatile price movements.

Part of the rise today was due to increasing demand from jewellers ahead of Christmas, but there is also growing talk of a possible Exchange Traded Fund being set up in the metal. This is a fund designed to allow investors to make a return on commodity prices, and gold and silver are already traded in this way.

”ETFs have contributed to pushing up prices for gold and silver as they have raised demand for these metals,” said analyst John Meyer of Numis Securities.

”The possibility of a platinum ETF could cause significant new physical demand in the short to medium term in order to match the ETF investment with physical metal.”

But he added that such a fund could be difficult to set up due to the lack of liquidity and some possible resistance from users such as automobile manufacturers, which use platinum to clean car exhaust emissions.

Even so the rise in platinum pushed Lonmin 100p higher to £30.80 and Aquarius Platinum 26p better at £11.48.

Xstrata was lifted 33p to £22.28 on the back of an upbeat note from Citigroup which upped its price target from £22.00 to £30.00.

But a wary report from analysts at Macquarie left BHP Billiton 6p lower at 966p and Rio Tinto down 6p to £27.26p. Rio was also dented by vague talk it might intervene in the agreed $25.9bn offer by copper miner Freeport McMoRan for larger rival Phelps Dodge.

Overall leading shares traded in a narrow range, with the FTSE 100 finally ending the day down 1.9 points at 6202.6 after an opening dip on Wall Street.

Credit rating agency Experian – recently spun off from GUS – added 19.5p to 619.5p after maiden results showed a 16% rise in first-half profits. The company also said it was on the lookout for acquisitions.

The other half of GUS – Argos and Homebase owner Home Retail Group – went the other way. It lost 2p to 424p after it reported an in-line 2% profit increase but made cautious noises about Christmas trading in the wake of recent interest rate rises. The company has also been lifted recently on bid speculation, with private equity groups Kohlberg Kravis Roberts and Blackstone said to be considering an offer.

Still on the bid front, the London Stock Exchange climbed 10p to £13.01 on hopes US rival Nasdaq may increase its offer from £12.43 a share in return for a board recommendation. Icap, the inter-dealer broker which earlier this year held talks about a link-up with the LSE, said today it had no plans to revive the discussions as it reported half-year profits in line at £120.8m. Icap slipped 8.5p to 478p.

ITV fell 2.5p to 112p after BSkyB’s dusk raid on Friday seemingly scuppered a planned takeover by cable group NTL. However investment group Fidelity, which sold its stake to BSkyB on Friday at 135p a share, has been buying up ITV shares again in the market at the current, lower, price and this afternoon declared a 1.64% stake.

Pharmaceuticals group AstraZeneca lost 21p to £30.10 after analysts at Bernstein moved their recommendation from market perform to underperform and cut their price target from £31.50 to £27.00.

Shire, suggested last week as a merger partner for AstraZeneca, also fell back, losing 15.5p to £10.43. A couple of the company’s directors also cashed in some of their options.

Leisure group Whitbread added 50p to £15.43 on continuing talk of an imminent £17.50 bid from America’s Starwood Capital, while Scottish Power was 5p higher at 760p on hopes Spanish group Iberdrola was about to unveil details of its proposed bid. Rival Scottish & Southern Energy rose 54p to £15.00 on hopes that it too may be in the sights of a predator.

Forth Ports has been widely considered to be a takeover candidate since the purchase of rival AB Ports in May by a Goldman Sachs-led consortium. Today came revived talk it faced a £23 a share offer from Macquarie, the Australian group whose name often pops up in connection with infrastructure companies. Forth added 103p to £20.15.

Elsewhere specialist plastics firm Victrex slumped 23p to 724p as Morgan Stanley cut its stake from 6.35% in September to 3.18% now. In October the company said its trading results for 2007 would be hit by the strength of sterling.

Lower down the market, semiconductor producer CML Microsystems fell 24p to 172p after it reported first-half turnover down 34% and a loss of £0.8m compared with a £1.4m profit. It warned second half losses would be ”materially above” those recorded in the first half.

Panmure Gordon cut its price target from 230p to 200p.

The day’s Aim disaster was Cosentino Signature Wines, a premium wine brands producer with operations in Northern California. The company said wholesale sales had been lower than expected since September and it has reached the limit of its current debt facilities. It said it was in talks to extend its loan arrangements and was also looking for an injection of equity from new investors. ”No assurance can be given at this time as to the outcome of these discussions,” it said. The shares lost 67% of their value, down 66.5p to 32.5p.

A new arrival fared better. Ishaan Real Estate floated at 100p and raised £180m, and by close of play the shares had reached 116p.

The company is taking minority stakes in a number of development projects, which will be developed by India’s K Raheja Corporation. Most of the projects are to build IT parks in and around Mumbai, Bangalore, and Hyderabad. The board includes Ian Henderson, former chief executive of Land Securities, as chairman and Vittorio Radice, ex-Selfridges.

Property management group Speymill edged up 0.75p to 58.25p. House broker Lewis Charles has upgraded from speculative buy to buy after the company launched a new fund to invest in property in Macau.

Shares in Nexus Management rose 0.135p to 0.71p in heavy trade, in anticipation of positive news from its recent investment and marketing agreement with PD Financial, which is thought to be experiencing major sales growth this month.

Back to the miners, this time the minnows. Allied Gold lost 3.25p to 15.25p on news that China’s Zijin Mining had decided not to take a 10% stake in the company, after conducting due diligence on the business.

But Uranium Resources added 0.875p to 2.875p after a ”highly encouraging” drilling update at its Tanzanian prospect.

Finally Black Rock Oil & Gas lost 0.325p to 1.075p after revealing it was in dispute with its joint venture partner in Colombia, Kappa Resources, which has led to the latter issuing a default notice. Black Rock has now commenced proceedings in Colombia to prevent any further action by Kappa until the dispute – mainly over cash payments – has been resolved.