Market Report: Egyptian troubles cost Centamin

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The Independent Online

There is not a great deal of confidence around Centamin at the moment. The gold digger may have moved quickly to deny talk it had broken the terms of its agreement with the Egyptian government, but deserting punters still left it as one of the worst fallers in the City yesterday.

After watching the mid-tier miner's shares drop nearly 15 per cent in early trading, bosses rushed out a statement saying reports from Egypt claiming the group had breached its concession agreement were wrong. They also attempted to pacify the market by announcing that its Sukari mine in the country was operating as normal.

However the damage was done, and despite Centamin's efforts it closed 6.95p worse off at 66.5p. The group has suffered a string of problems in the country recently, including labour disputes, issues with fuel subsidies and a shortage of explosives. Egypt's political turmoil has, of course, not helped, and yesterday's fall was also being linked to the growing tensions between its military and the new president, Mohammed Mursi.

Having finished last week on a downer, the FTSE 100 continued to move lower, sliding 35.3 points to 5,627.33. The latest gathering of eurozone finance bigwigs failed to calm fears as Spanish and Italian bond yields shot up.

After reports over the weekend claimed big-wigs at Barclays were considering a break-up of the bank as the Libor scandal rumbles on, Shore Capital's Gary Greenwood warned the "costs of splitting the business in two would be significant and the process would be complicated".

He also added that the chances of its investment bank getting snapped up by a US rival were "unlikely" because of regulation changes, as Barclays dipped 1.35p to 163.4p.

BAE Systems was among the blue-chip stocks on the leaderboard – the arms dealer was fired up 4p to 296.9p in the wake of reports it is likely to win a £7.1bn jet contract with the US government.

Xstrata was pushed back 18.4p to 815.6p following talk it could give shareholder Qatar until September to sort out its issues with Glencore (1.6p lower at 308.75p) over the commodity trader's proposed merger with the digger.

The miners were generally weaker thanks to figures showing inflation in China dropping to a 29-month low amid falling demand. Of course, this also hit Burberry, which was pegged back 34p to 1,255p ahead of tomorrow's trading update from the luxury retailer.

First up, however, will be Marks & Spencer's first-quarter statement today. The department store is expected to announce its worst three months of trading for three years, but despite this it bounced up 3p to 321p yesterday. Still, according to figures from Markit Securities Finance, M&S remains one of the most popular stocks for short sellers.

Down on the FTSE 250, Avocet Mining was finally celebrating an up day. Having shed nearly 60 per cent of its share price since slashing its production target at the end of June, the gold producer powered ahead 9.75p to 72.75p, although this barely managed to make a dent in its recent losses.

There are some people who believe that the company's fall could leave it vulnerable to an approach – Nomura's Tyler Broda last week claimed Avocet's appeal as a potential bid target would help the stock.

Strewth. News from Down Under knocked Kenmare Resources 3.95p lower to 34.24p after its Australian rival Iluka issued a profits warning which the mineral sands producer blamed on a sharp drop in demand.

Meanwhile, market gossips once again suggested Afren could be a possible target for US giant Exxon. However, dealers were unimpressed by the familiar speculation as the oil explorer finished 1.8p worse off at 104.8p.

After talk earlier in the session that Mount Street Capital was working on a possible move for Invista, the private-equity firm confirmed it was mulling over making an approach for the real estate fund management group, majority owned by Lloyds (down 0.11p to 30.19p).

Invista – which was lifted 0.25p to 15p on Aim – last month agreed to a bid worth 14.75p-a-share from Palmer Capital.

This beat an earlier approach from Internos Real Estate priced at 12.5p a pop, and City sources claimed that one option for Mount Street Capital could be to team up with Internos.

FTSE 100 Risers

Meggitt 403.9p (up 10.4p, 2.64 per cent) Aircraft parts-maker – which analysts from UBS last week said could become a potential bid target – continues its recent strong run by topping the Footsie.

Royal Bank of Scotland 205.7p (up 4.2p, 2.08 per cent) Bank helped to rise by analysts from Barclays keeping their "overweight" advice, although they do cut their target price to 270p from 340p.

FTSE 100 Fallers

ITV 72.85p (down 1.95p, 2.61 per cent) Broadcaster is among the day's worst fallers despite Citigroup's scribblers keeping the stock as one of their top stocks in the European media sector.

Tullow Oil 1,437p (down 28p, 1.91 per cent) Energy explorer has now finished in the red for four consecutive trading sessions and lost 6 per cent of its share price since last week's trading statement.

FTSE 250 Risers

Balfour Beatty 311p (up 10.3p, 3.43 per cent) Construction company is one of the biggest risers on the mid-tier index as it prepares for the release today of its half-year trading update.

Debenhams 87.75p (up 1.25p, 1.45 per cent) Department store manages to climb to a new, two-and-a-half-year high, having added more than 5 per cent since its interim management statement last month.

FTSE 250 Fallers

New World Resources 317.1p (down 40.9p, 11.42 per cent) Czech miner knocked back by Bank of America Merrill Lynch deciding to downgrade the company's rating to "underperform".

Aquarius Platinum 41.59p (down 4.52p, 9.8 per cent) Platinum producer retreats as South African union says it is ready to go to court to force the group to reopen its Everest mine.