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Mining stocks drive FTSE 100 rebound Mining stocks drive FTSE 100 rebound
(about 2 hours later)
Mining stocks that were hammered on Black Monday clawed back some ground on Tuesday after major companies announced cost cuts that are likely to preserve expected dividend payouts.Mining stocks that were hammered on Black Monday clawed back some ground on Tuesday after major companies announced cost cuts that are likely to preserve expected dividend payouts.
Shares in BHP Billiton jumped by 5.5% to £10.21 – despite the world’s biggest miner reporting a 52% slump in annual profits to a decade low – after the group said it would slash spending to shore up dividends. Shares in BHP Billiton jumped by 5.5% to £10.21 – despite the world’s biggest mining company reporting a 52% slump in annual profits to a decade low – after the group said it would slash spending to shore up dividends.
BHP and its peers have been hit after they increased output of iron ore, copper and coal just as demand growth slowed in China, the top global metals consumer, and have been slashing costs over the past three years to cope. BHP and its peers have been hit after they increased output of iron ore, copper and coal just as demand growth slowed in China, the top global metals consumer, and the companies have been slashing costs over the past three years to cope.
But BHP 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.But BHP 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 8.7% 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 copper mining company Antofagasta added 8.7% after saying it was targeting savings of about $160m this year. Anglo American and Rio Tinto climbed nearly 3% as base metals staged a modest rebound.
The mining sector as a whole recovered nearly 4% after having dropped 9% on Monday to its lowest level since 2009. The rally helped the FTSE 100 to rise more than 3% to 6,081 after China cut interest rates.The mining sector as a whole recovered nearly 4% after having dropped 9% on Monday to its lowest level since 2009. The rally helped the FTSE 100 to rise more than 3% to 6,081 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 will not be completed 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 will not be completed 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.
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 six-and-a-half-year lows, with Brent trading at less than $44 a barrel. Iran added to the nervousness when its oil minister said it would accelerate crude production and exports as soon as international sanctions were lifted.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 six-and-a-half-year lows, with Brent trading at less than $44 a barrel. Iran added to the nervousness when its oil minister said it would accelerate crude production and exports as soon as international sanctions were lifted.
Bijan Zanganeh, the Iranian oil minister, said the country should sell its crude regardless of the oil price. “After lifting sanctions, Iran will take back the market share of more than 1 million barrels a day that it lost,” he said. Bijan Zanganeh, the Iranian oil minister, said the country should sell its crude regardless of the oil price. “After lifting sanctions, Iran will take back the market share of more than 1m barrels a day that it lost,” he said.
Iranian oilfields, which pumped around 2.87m bpd in July, could increase production to between 3.4m and 3.6m bpd within months of sanctions being lifted, the west’s energy watchdog, the International Energy Agency, said.Iranian oilfields, which pumped around 2.87m bpd in July, could increase production to between 3.4m and 3.6m bpd within months of sanctions being lifted, the west’s energy watchdog, the International Energy Agency, said.
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. With crude oil prices so weak, there are hopes of further petrol price reductions. Steve Gooding, the 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.“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.”“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.”