Market Report: Glencore joins the boys in Brazil
Wednesday 27 February 2013
The billionaire investor Carl Icahn will be sharing a spot on the share register of a Brazilian miner with Glencore. The world's largest commodities trader is hoping to grasp a share of the lucrative iron-ore market to add to its hold on the tradeable zinc, copper, grain and oil sectors, and has bought a holding in Ferrous Resources. Reports suggest it has offered funding to help develop the Viga mine in exchange for a bigger stake in the group.
Mr Icahn is said to have bought his stake last year from Phil Falcone's hedge fund Harbinger Capital Partners. The price of iron ore has surged 75 per cent since a three-year low in September.
Traders expected a move into iron ore after Glencore's merger with Xstrata, which will complete next month. The combined trader and miner will become the world's largest thermal coal exporter, the largest zinc producer and the third-largest copper miner, but has very little exposure to iron ore mining.
The stake-building in Ferrous by Glencore is its first investment in a iron-ore producer.
Glencore's shares ticked up 2.45p to 385.5p.
Xstrata has long wanted to get into the iron-ore game – in 2009 it tried to buy the mining giant Anglo American. Its move on Ferrous puts rumours that Glencore might look at Anglo to bed. Nevertheless, Anglo's shares put on 14p to 1,952.5p.
A short squeeze on hedge funds who had been expecting weak numbers for the Glasgow-based oil services and engineer Weir pushed its share price to the top spot on the blue-chip index. Weir, up 158p to 2,322p, reported better-than-expected annual profits, but its outlook for the year was cautious with guidance for low single-digit revenue growth.
At the other end of the table, the biggest faller was the oil services group Petrofac. It disappointed analysts with a lack of future targets. Investors are already nervous after rival Saipem's profit warning last month. Petrofac reported revenues up 9 per cent, but the shares leaked 100p to 1,497p.
The mall owner Intu Properties is issuing more shares to fund its £251m purchase of Milton Keynes' Midsummer Place shopping centre, which is home to the town's original Concrete Cows artwork. But analysts thought its results, also announced, "disappointed on earnings", and the shares lost 9p to 333.9p.
It wouldn't be right for the City to go a day without a reheated bid rumour, and rehashed bid chatter accompanied a share-price rise for the retailer Marks & Spencer. The group, which has been the subject of on-and-off vague speculation, added 7.5p to 369.5p.
One deal that isn't likely to happen any time soon is Vodafone's interest in Kabel Deutschland. Reports claimed that Vodafone had put plans to bid for Kabel Deutschland on hold. The potential deal had not been popular with the City and shares in the telecoms group had dropped more than 5 per cent in the two weeks since news broke. The shares gained 3.2p to 165.1p after reports emerged that the talks have been shelved.
ITV meanwhile was playing down bid talk as the broadcaster revealed strong results. The shares declined 1.2p to 119p.
Analysts at HSBC downgraded Serco, the contractor that runs the Docklands Light Railway, as they are concerned about it keeping some of its contracts. HSBC is worried about the "unusual amount of contract retendering this year", and downgraded its rating to hold with a 590p price target. The shares lost 3.5p to 571p.
The FTSE 100 index clawed back some of Tuesday's losses, incurred amid fears of eurozone contagion after Italy's political stalemate sent equities south. It added 55.44 points to 6,325.88.
The small-cap interactive whiteboard maker Promethean World reported a £160m loss for 2012, and the shares slipped 5p to 18p. It said austerity measures have continued to hit the education budgets of its customers.
Israeli-based Starcom, the seller of "smart" padlocks with in-built GPS, debuted on AIM after raising £2.72m through a share placing priced at 20p. The shares closed at 22.5p.
Shares in the offshore oil-services group Thalassa Holdings surged 93p to 165p. It has agreed a deal with Norway's Statoil for a Ecuadorian contract worth more than $50m (£33m) over the next five years.
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