Market Report: Investors dig into miners as copper price spikes

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The Independent Online

Rising expectations of another reduction in US interest rates boosted the demand for industrial metals, which, in turn, transformed Monday's losers into yesterday's winners. Miners – from Anglo-American, which saw its stock rise despite news of production problems owing to the South African power crisis, to Antofagasta, which swung to the top of the FTSE 100 leaderboard on the back of a spike in the price of copper – led the market after biding time at the bottom of the table on Monday.

Anglo closed up 5.80 per cent at 2,608p, while Anto-fagasta – which gained as copper reached $7,170.5, up $278, on the London Metal Exchange – rose by 6.69 per cent to 669.5p. Kazakhmys, another copper mining business, also had a good day. Evolution Securities gave the stock a push by initiating coverage with a "buy" recommendation, noting that the company was "a low-cost integrated copper producer with exceptional cash generation". The shares jumped 4.74 per cent, and were perched at seventh place on the leader board at 1,193p. Xstrata, which has been the big story in the sector for some time, continued its rally and closed up as the market waited for confirmation of a bid from its Brazilian rival Vale. Fresh reports indicated that Vale had won funding commitments from HSBC and Lehman Brothers, increasing the prospect of a formal announcement soon. Xstrata's shares ended second on the leaderboard, up 207p at 3,719p.

Sector counterpart BHP Billiton, which faces a "put-up or shut-up" deadline next week to either formalise its bid or walk away from rival Rio Tinto, also closed positively, up 55p at 1,449p, while Rio's stock rose by 121p to 4,670p.

At the other end of the table, shares in the energy giant Royal Dutch Shell fell after the company said it would not provide oil and gas replacement guidance with its annual results, which are due tomorrow. Dresdner Kleinwort said that news was "regrettable" and Royal Dutch Shell was down 10p at 1,766p.

Imperial Tobacco, which said it had seen a positive start to the year, was also at the bottom of the table. Negative sentiment from Lehman Brothers, which said that the company's limited comments were a little cautious in tone, did not help as the shares were depressed 5p to 2,365p.

Elsewhere, the pub group Mitchells & Butlers said its finance director was leaving after it took a hit of £274m after the closure of hedges taken out in connection with last year's proposed property joint venture with Robert Tchenguiz. The move prompted many to speculate about a possible takeover. Brokers at KBC Peel Hunt underlined the buying opportunity by revising their stance on the stock to "buy". Late reports that the company had received interest from both trade and private equity suitors also helped the shares, which closed up almost 5 per cent at 401p.

Among small cap shares, Autonomy, the Cambridge-based software developer, beat analysts' expectations and reported a 64 per cent rise in fourth-quarter profit. The company also said that, unlike most in the market, it was set to make the most of the sub-prime crisis as increased regulatory oversight spurs firms to adopt its products. The news lifted the share price by 7.22 per cent, or 61p, to 906p, claiming fifth place on the FTSE 250 risers. Debenhams was just behind after the market learnt that Mahesh "Micky" Jagtiani, the Dubai-based retail entrepreneur, had increased his stake in the department store chain. Takeover rumours, which began circulating after Milestone Resources, Mr Jagtiani's investment vehicle, raised its share of Debenhams from 8.4 to 9.1 per cent, pushed the stock up by just over 7 per cent to 71.75p.

Defence systems firm Ultra Electronics was also a winner after Evolution initiated coverage with a "buy" recommendation. Utlra's shares rose by almost 3 per cent to 1,116p.

On AIM, stockbroker Jarvis Securities found favour after posting a spectacular 96 per cent rise in pre-tax profits, which climbed to £2.8m in 2007. The news was ahead of the final broker forecast of £2.2m and lifted the company's share price by 12.5 per cent to 197.50p.

Also on AIM, Kalahari Minerals gained more than 17 per cent after a positive update from Extract Resources, in which it owns a 36.2 per cent share, regarding the company's Husab Uranium project in Namibia. Brokers at both Ambrian and Evolution issued "buy" notes in reaction to the news, helping the company's share price reach 33.75p, up 5p, by the close.

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