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| Mining stocks drive FTSE 100 rebound | Mining stocks drive FTSE 100 rebound |
| (35 minutes later) | |
| Mining stocks hammered on Black Monday have clawed back some ground, after major companies announced cost savings that are likely to preserve expected dividend payouts. | Mining stocks hammered on Black Monday have clawed back some ground, after major companies announced cost savings that are likely to preserve expected dividend payouts. |
| Shares in BHP Billiton jumped by 8.5% to £10.49, despite reporting a 52% slump in annual profit to a decade low, after the group said it would slash spending to shore up dividends. | Shares in BHP Billiton jumped by 8.5% to £10.49, despite reporting a 52% slump in annual profit to a decade low, after the group said it would slash spending to shore up dividends. |
| The world’s biggest miner reiterated its pledge never to cut its dividend, and lowered its target for capital spending for the year to June 2016 to $8.5bn (£5.38bn) from $9bn to help meet the promise. | The world’s biggest miner reiterated its pledge never to cut its dividend, and lowered its target for capital spending for the year to June 2016 to $8.5bn (£5.38bn) from $9bn to help meet the promise. |
| “Our commitment to our progressive dividend is resolute,” BHP’s chief executive, Andrew Mackenzie, said on Tuesday. “It has withstood many previous cycles and is a key differentiator relative to our peers.” | “Our commitment to our progressive dividend is resolute,” BHP’s chief executive, Andrew Mackenzie, said on Tuesday. “It has withstood many previous cycles and is a key differentiator relative to our peers.” |
| Copper miner Antofagasta added 3.7% after saying it was targeting savings of about $160m this year. Peers Anglo American and Rio Tinto climbed nearly 3% as base metals staged a modest rebound. | Copper miner Antofagasta added 3.7% after saying it was targeting savings of about $160m this year. Peers Anglo American and Rio Tinto climbed nearly 3% as base metals staged a modest rebound. |
| The mining sector as a whole recovered 3.7% after dropping 9% to its lowest level since 2009 on Monday, helping the FTSE 100 to rise over 3% to 6100 at lunchtime after China cut interest rates. | |
| Meanwhile, shares in BG, which is the subject of a £13.50 a share takeover offer from Shell, moved up from £9.31 to £9.60. BG’s share price is still far short of Shell’s offer price, leaving some to speculate that the deal, which values BG at £47bn, could be in trouble. | Meanwhile, shares in BG, which is the subject of a £13.50 a share takeover offer from Shell, moved up from £9.31 to £9.60. BG’s share price is still far short of Shell’s offer price, leaving some to speculate that the deal, which values BG at £47bn, could be in trouble. |
| Sources said the deal, which does not complete until early next year owing to regulatory issues, was progressing as planned. However, others warned that if oil prices and stock prices continued to tumble, Shell might try to renegotiate the agreement terms. | Sources said the deal, which does not complete until early next year owing to regulatory issues, was progressing as planned. However, others warned that if oil prices and stock prices continued to tumble, Shell might try to renegotiate the agreement terms. |
| Some bankers fear recent stock market volatility and share price falls could derail several merger deals, just when the global market looked set to beat levels last seen before the financial crash. | Some bankers fear recent stock market volatility and share price falls could derail several merger deals, just when the global market looked set to beat levels last seen before the financial crash. |
| However, two takeover deals seemed to be proceeding without a hitch, with Zurich tabling a £5.6bn bid for insurer RSA and Monsanto sweetening its takeover bid for the Swiss agribusiness group Syngenta. | |
| Oil bounced back from heavy losses – but global oversupply and worries over the severity of the economic slowdown in China, the world’s biggest commodity consumer, kept prices near 6 and a half-year lows, with Brent trading at less than $44 a barrel. | Oil bounced back from heavy losses – but global oversupply and worries over the severity of the economic slowdown in China, the world’s biggest commodity consumer, kept prices near 6 and a half-year lows, with Brent trading at less than $44 a barrel. |
| With crude oil prices so weak, there are hopes of further petrol price reductions. Steve Gooding, director of the RAC Foundation, said: “So is there the prospect of fuel at £1 a litre? For some people, in some places, yes. Should we all bank on it? No. | |
| “Despite the collapse in the oil price, wholesale fuel prices are still slightly more than they were earlier this year when pump prices were at their lowest level since the back end of 2009. | |
| “What drivers pay on the forecourts is dictated by more than the cost of crude. There are seasonal variations in demand for refined products and we are part of a global market. The exchange rate also plays a part. And the biggest influence remains the Treasury. More than two-thirds of what motorists pay goes to the chancellor in tax.” |